StarHub shrugs off iPhone 4S launch

But the economics of pay TV and the painfully slow take-up of NBN are posing threats to the telco.

According to CIMB, StarHub should not be too affected by the iPhone launch, thanks to more rational subsidies so far though the degenerating economics of pay TV is a concern. NBN take-up is slow and this should blunt competition in the residential market where StarHub is dominant.

Here’s more from CIMB:

Not too hurt by iPhone 4S
We do not expect too severe an impact from the iPhone 4S launch given fairly rational subsidies thus far. While 4Q margins could be affected, this should only be a blip. Industry rationality is probably inspired by a rather saturated smartphone market where 65-70% of postpaid users now possess smartphones and any ARPU uplift is unlikely to be material.

Content costs show few signs of receding
We remain cautious on the economics of pay TV despite the cross-carriage regime and StarHub’s landmark non-exclusive content deal. This is because content costs show few signs of receding. Production costs continue to rise with operators paying for a wider use of content for
different platforms. Most importantly, the entry of mio TV has given content owners better
bargaining power.

NBN take-up still painfully slow
The take-up of NBN is unlikely to be material, as NBN remains hampered by operational issues. Squabbles persist over access to premises and who would bear the cost of access. Moreover, the installation capacity of OpenNet is limited. While that would preserve StarHub’s dominance in the residential market, it would also hamper its entry into the commercial arena, currently dominated by SingTel.

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