Singtel's joint-venture streaming service Hooq in liquidation

Hooq Digital, a joint-venture company in which Singtel has an indirect 76.5 per cent effective interest, has commenced a creditors' voluntary liquidation.

Meetings for shareholders and creditors will be held on April 13, said the video-on-demand provider yesterday.

Hooq has appointed liquidators to oversee ongoing operations.

Singtel, Sony Pictures Television and Warner Bros Entertainment established Hooq in 2015 to offer movies and television series to viewers in Asia via streaming or downloading.

Since the firm was founded, "significant structural changes" have taken place in the over-the-top (OTT) video market and its competitive landscape, Hooq said.

OTT film and television content is provided via a high-speed Internet connection rather than a cable or satellite provider.

"Global and local content providers are increasingly going direct, the cost of content remains high and emerging-market consumers' willingness to pay has increased only gradually amid an increasing array of choices," Hooq said.

As a result, it has become increasingly challenging to operate a viable business model for an independent OTT distribution platform, it said.

Hooq has not been able to grow sufficiently to provide sustainable returns or cover the escalating content costs and continuous operating costs of the platform.

Ms Janice Chong, Fitch Ratings' director of Asia-Pacific corporate ratings, said the premium OTT video business is facing challenges amid intense competition in video-streaming services, the significant content investment required and a lack of ability to monetise content for telcos.

Singtel said the Hooq liquidation is not expected to have a material impact on its net tangible assets or earnings per share.

Operating revenue from Singtel's digital life segment shrank by almost 15 per cent in the third quarter from a year earlier to $336 million.

Most of it - $324 million - came from Singtel's digital marketing arm Amobee, while the remaining $12 million mainly comprised revenues from Hooq and DataSpark.

Operating revenue from digital businesses - including revenues from Amobee, Hooq and DataSpark - made up about 7.4 per cent of the $4.38 billion in total group operating revenue in Singtel's third quarter.

Singtel group digital life chief Samba Natarajan said last May that Hooq's operating business continued to grow, and that the revenue generated had more than doubled over the previous year.

He noted a month later that "value realisation" for units such as Hooq and Amobee could involve an initial public offering or new partners taking stakes.

Fitch's Ms Chong said there is an "intensifying" need to turn around the telco's digital life segment owing to challenging growth prospects in Singtel's home markets and the impending 5G capital expenditure, which are both putting pressure on cash flows.

"Amobee, the largest portion of Singtel's digital life segment, is already Ebitda-positive, and the quickest solution to turn around this segment could possibly lead to the discontinuation of loss-making Hooq," Ms Chong added, referring to earnings before interest, taxes, depreciation, and amortisation (Ebitda).

Singtel's annual report for last year said Hooq had "transformed" its business model over the past year to offer affordable daily plans, as well as a freemium layer that includes free-to-air channels, advertising video on demand and subscription video on demand.

Hooq also started strategic digital partnerships with Hotstar in India and Grab in South-east Asia to provide in-app viewing and easy access to its content.

Singtel shares closed up 1.98 per cent to $2.57 yesterday.


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A version of this article appeared in the print edition of The Straits Times on March 28, 2020, with the headline Singtel's joint-venture streaming service Hooq in liquidation. Subscribe