TPG Telecom's entry to drag StarHub's mobile business further: CIMB

StarHub’s mobile revenue is projected to fall by 5.8% in 2020 after TPG's entry.

Over four years, CIMB Research expects StarHub's mobile revenue to go down by a cumulative of 7.9% and its contribution to total service revenue to plummet by 52-55%.

According to a report, mobile service revenue (MSR) could still rise by 0.9% in 2017 and 1.4% in 2018, due to its subscription fee hikes.

Despite the raised competitive pressure from the entry of more mobile virtual network operators (MVNO) and a continued decline in roaming revenues, this can still be offset by StarHub’s $5.10 a month subscription fee hikes across its postpaid plans in September 2017.

After that, mobile revenue is expected to fall by 2.7% and 5.8% in 2019 and 2020, driven by more intense competition arising from TPG Telecom’s market entry by the end of 2018.

Moreover, pay TV revenue is expected to slip further by a cumulative 23%, on the back of a diminishing subs base due to substitution by alternative viewing platforms and piracy.

Meanwhile, broadband revenue is also seen to decline by 4.2% in on gradual subs market share loss to newer players, including TPG, which is likely to enter the residential broadband market following its mobile service launch.

Here's more CIMB Research:

We believe StarHub’s current DPS of $0.16 is sustainable across FY17-20F.

We see its net debt/EBITDA rising from 1.2x at end-FY17F to a still-manageable 1.5x at end-FY20F. This already factors in $282m payment for the 700MHz spectrum in mid-2018, which could actually be paid later if the use of the spectrum is deferred beyond Jan 2019 (due to possible delays in analogue switch-off in neighbouring countries, especially Indonesia).

However, at the same time, we think there is little room for StarHub to raise DPS beyond $0.16. Besides already fairly optimal net debt/EBITDA by end-FY20F, StarHub is likely to conserve some cash for future M&As in the FNS space and as a cash buffer in case competition from TPG is worse than expected.

Also Read

Over 100 domains linked to piracy shut down

Network failures disrupt Singapore firms for hours weekly

Since you're here...

...there are many ways you can work with us to advertise your company and connect to your customers. Our team can help you dight and create an advertising campaign, in print and digital, on this website and in print magazine.

We can also organize a real life or digital event for you and find thought leader speakers as well as industry leaders, who could be your potential partners, to join the event. We also run some awards programmes which give you an opportunity to be recognized for your achievements during the year and you can join this as a participant or a sponsor.

Let us help you drive your business forward with a good partnership!

I want to download the media kit