In a report recently, MDA (Media Development Authority) explained that it forced SingTel to share its BPL (Barclays Premier League) content as the telco had made it “commercially unviable” for StarHub to separately purchase the rights. The cross-carriage ruling resulted in the two telcos offering hefty “subsidies” to either lure subscribers to switch or retain subscribers. But we do not expect the migration of Pay TV customers from SingTel to StarHub to be significant, given that it may still be cheaper for existing subscribers to watch BPL on the mio TV platform. We have a NEUTRAL rating on the sector, with a HOLD on SingTel (S$3.81 FV) and SELL on StarHub (S$3.82 FV).
MDA explains BPL ruling
In a report recently, MDA (Media Development Authority) explained that it forced SingTel to share its BPL (Barclays Premier League) content as the telco had made it “commercially unviable” for StarHub to separately purchase the rights. According to the regulator, there were two clauses in SingTel’s contract that had the “combined effect” of making it exclusive, thus trigger the cross-carriage ruling. One clause did not allow StarHub to announce the purchase of these rights or promote the matches before a prescribed time. Another entitled SingTel to “a significant price reduction” of fees it paid for the rights, which MDA noted would probably lead to the right owners asking StarHub for a similar fee.
Actual impact likely limited
This resulted in the two telcos offering hefty “subsidies” to either lure subscribers to switch or retain subscribers. Recall that SingTel also upped the BPL pricing to S$59.90 (before GST) per month for new subscribers for the stand-alone package, which sparked off a “bro” marketing campaign. In the end, StarHub gave a S$600-rebate (S$30 per month for use to offset existing StarHub services) for new and existing subscribers, while SingTel gave a S$480-discount for new and existing customers. But we do not expect the migration of Pay TV customers from SingTel to StarHub to be significant, given that it may still be cheaper for existing subscribers to watch BPL on the mio TV platform.
Maintain NEUTRAL on sector
We also suspect that the rebate that StarHub is offering to lure subscribers away from SingTel may hit its bottom-line, given that all BPL fees go to SingTel (StarHub only gets a token cross-carriage fee). Perhaps this is one reason why StarHub has kept its EBITDA margin guidance at 31% (versus 1H13’s 33.7%). We have a NEUTRAL rating on the sector, with a HOLD on SingTel (S$3.81 FV) and SELL on StarHub (S$3.82 FV).
In a report recently, MDA (Media Development Authority) explained that it forced SingTel to share its BPL (Barclays Premier League) content as the telco had made it “commercially unviable” for StarHub to separately purchase the rights. According to the regulator, there were two clauses in SingTel’s contract that had the “combined effect” of making it exclusive, thus trigger the cross-carriage ruling. One clause did not allow StarHub to announce the purchase of these rights or promote the matches before a prescribed time. Another entitled SingTel to “a significant price reduction” of fees it paid for the rights, which MDA noted would probably lead to the right owners asking StarHub for a similar fee.
Actual impact likely limited
This resulted in the two telcos offering hefty “subsidies” to either lure subscribers to switch or retain subscribers. Recall that SingTel also upped the BPL pricing to S$59.90 (before GST) per month for new subscribers for the stand-alone package, which sparked off a “bro” marketing campaign. In the end, StarHub gave a S$600-rebate (S$30 per month for use to offset existing StarHub services) for new and existing subscribers, while SingTel gave a S$480-discount for new and existing customers. But we do not expect the migration of Pay TV customers from SingTel to StarHub to be significant, given that it may still be cheaper for existing subscribers to watch BPL on the mio TV platform.
Maintain NEUTRAL on sector
We also suspect that the rebate that StarHub is offering to lure subscribers away from SingTel may hit its bottom-line, given that all BPL fees go to SingTel (StarHub only gets a token cross-carriage fee). Perhaps this is one reason why StarHub has kept its EBITDA margin guidance at 31% (versus 1H13’s 33.7%). We have a NEUTRAL rating on the sector, with a HOLD on SingTel (S$3.81 FV) and SELL on StarHub (S$3.82 FV).
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