Starhub

Kim Eng on 12 Oct 2012

SingTel scores early BPL goal. SingTel has stolen a march on StarHub in an early offer for BPL, and obtained non-exclusive rights for the next three seasons. We think it is a lose-lose situation for StarHub. If it decides to pay for its own rights, it will probably have to pay a high price and be prepared for margin contraction, or risk losing subscribers and revenue to SingTel. However, if it does not enter the fray, there may actually be room for dividends to improve as the cash strain would be lessened. Although the situation is fluid, we would recommend SELL as we have assumed that StarHub cannot be without BPL. However, we would review our call if it decides not to bid.

Lose-lose for StarHub. SingTel has jumped the gun on StarHub in an early offer for BPL, and obtained non-exclusive rights for the next three seasons. As the deal is non-exclusive, the cross-carriage law does not apply and it does not have to share. StarHub now has to scramble to negotiate its own rights. It will either have to cough up and suffer lower margins down the road, or back off if the price is too steep for it to stomach, in which case it will risk losing subscribers to SingTel. 

StarHub cannot afford to go without BPL again. In our view, StarHub cannot afford to be without BPL for another three years, so we think they will pay. Although it decided not to for the 2010-2013 seasons, that was when mioTV was still a fledgling product and struggling with infrastructure problems. However, mioTV is now a different product as it has acquired compelling content, largely resolved its technical difficulties and SingTel is set on making it even better. 

Could cost StarHub a pretty penny. While the price SingTel offered for the 2013-2015 seasons is not known, SGD300m is the oft- mentioned price that it bidded in 2009. In our view, the only way SingTel could have convinced FAPL (Football Association Premier League) to accept its non-exclusive offer without holding a tender is to match its old price. Anything on top would be gravy for FAPL, but SingTel is likely to have stipulated in its negotiations that FAPL cannot accept a lower price from StarHub.