OSK-DMG Research, July 30
SINGAPORE's Ministry of Communications and Information has rejected SingTel's appeal for an exemption from cross-carrying the Barclays Premier League (BPL).
The expected outcome will not hurt SingTel much in the short to medium term as viewing habits take time to change and viewers would want to compare the new bundled packages that StarHub will be unveiling very soon.
That said, SingTel would have to reassess its strategy on iconic sports content (such as the upcoming 2014 World Cup) going forward, as this development has thrown a spanner into its bundling proposition.
The decision by the Media Development Authority (MDA) to cross-carrying the BPL benefits StarHub as its subscribers would have access to the content without having to buy a second set-top box (STB), thus mitigating pay-TV churn.
BPL will cost 72 per cent more on its own. SingTel has fixed the price for standalone BPL content at $59.90 a month, the same rate that StarHub subscribers would have to pay to watch it on the latter's platform. This is 72 per cent higher than the retail price for the sports pack during the 2011 season, with BPL bundled in.
While the cost of BPL rights has skyrocketed over the years, it would appear that cross-carrying the content does not result in lower subscription fees (on a standalone basis).
SingTel's bundled Gold Pack (over 80 channels including BPL), being retailed for only $64.40 a month, is the telco's tactic to "persuade" StarHub subscribers who may be put off by the standalone BPL price.
We expect StarHub to up the ante shortly by unveiling attractive content bundles now that SingTel has made its pricing known.
It has to do this before the Aug 1 date for subscribers to start signing up for the BPL, which commences broadcast on Aug 17.
Coincidentally, M1 chose to introduce MiBox, an over-the-top Android STB, over the weekend, offering 116 TV channels and more than 18,000 video-on-demand channels.
We think M1's service, which is available to non-M1 fibre customers, will have niche appeal as it does not come with premium content. The current 1Box, launched in 2010, will be retired.
We are still "neutral" on the sector. Our top pick for exposure to Singapore's telecoms sector is M1 ("neutral", fair value: $3.25), as it is in a sweet spot of not having to contend with expensive content and offers the strongest revenue upside potential from next-generation network fibre services.
Sector - NEUTRAL
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