StarHub eyes growth in data analytics

StarHub's share price has tumbled more than 30 per cent in the two years since Singapore announced plans to facilitate the entry of a fourth mobile player.
StarHub's share price has tumbled more than 30 per cent in the two years since Singapore announced plans to facilitate the entry of a fourth mobile player.PHOTO: BLOOMBERG

It targets corporate clients ahead of stiffer challenge from 4th telco

StarHub, facing the biggest shake- up in Singapore's phone industry since it started almost two decades ago, is seeking growth beyond the consumer market. Its strategy: providing more data analytics to corporate clients.

Once an upstart third entrant, the country's No. 2 telecommunications company is grappling with the emergence of a fourth mobile network operator, TPG Telecom. According to StarHub, the worst-case scenario is for the Australian winner of the new licence to offer unlimited data, bundling the promotion with broadband.

TPG did not immediately respond to an e-mail seeking comments. StarHub offers mobile phone, broadband and pay-TV services.

"The margin in that segment is already under intense competition, and that will remain a highly contested space," StarHub chief executive officer Tan Tong Hai said in an interview. "As consumers use their mobile phones, broadband and TV, the analytics generate a lot of interesting data, and we've realised that such information is very useful for our corporate clients."

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Corporate customers accounted for 42 per cent of StarHub's revenue last year, more than double the figure from eight years ago, according to the firm. The segment's revenue grew at a compound annual rate of about 5 per cent to 6 per cent over the last six years, in contrast to slight negative growth in the consumer business. Mr Tan expects growth in the corporate segment to accelerate, but did not forecast its revenue contributions.

The company says it competes on data analytics with Singtel, which StarHub says is still the dominant player in the market.

"This could be a growth area for StarHub, but we don't think it will grow at a pace fast enough to offset the impact of TPG's entry," said Mr Eugene Chua, an analyst at OCBC Investment Research who has a sell rating on the company.

StarHub's share price has tumbled more than 30 per cent in the two years since Singapore announced plans to facilitate the entry of a fourth mobile player.

The stock is the only decliner among Singapore's three telco incumbents this year.

Another potential area for growth is buying assets. StarHub has the capacity to raise its debt levels to fund acquisitions that can support its enterprise business, according to chief financial officer Dennis Chia.

BLOOMBERG

A version of this article appeared in the print edition of The Straits Times on July 11, 2017, with the headline 'StarHub eyes growth in data analytics'. Print Edition | Subscribe