After plunging about 42 per cent this year, StarHub shares may be set for a modest turnaround, just as incoming chief executive officer Peter Kaliaropoulos takes over next week.
"There is a bottom," said Daiwa Securities Group analyst Ramakrishna Maruvada. He upgraded the shares to "hold" from "sell" last week, citing the plunge this year as evidence that the challenges from rival carriers and entertainment platforms like Netflix have been adequately discounted.
Mr Kaliaropoulos, who built a reputation as a turnaround executive by leading Zain Saudi Arabia, takes over on July 9 and will have plenty to work on at the company.
The entrance of a fourth player, TPG Telecom, in Singapore's mobile phone market is intensifying competition for subscribers, just as StarHub's bundling model, in which it offers access to film, television and broadband services, is being challenged by streaming powerhouses like Netflix.
The stock was moved from the MSCI Singapore Index in May to the small-cap gauge.
There are "deep-rooted issues plaguing the company", said Mr Maruvada. "Its failure to adapt to changes in the external environment and ineffective execution of its business plan" have contributed to the tumbling stock price.
Earnings per share probably slumped 38 per cent to three cents in the quarter ended June, according to the average analyst estimate, an eighth straight quarter of decline.
StarHub "has always been and will continue to be committed to driving the business and delivering shareholder value", said its chief strategic partnership officer Jeannie Ong. "For example, we are boosting network and customer service quality to drive cost efficiencies, and accelerating organic and inorganic growth in our enterprise business."
The company declined to comment on the incoming CEO's plans for the company ahead of his start date. Still, at least four brokerages have upgraded the stock over the past month.
The carrier is trading at an enterprise value about 6.2 times trailing earnings before interest, taxes, depreciation and amortisation, compared with the 13 times average for firms in the Straits Times Index.
Rival Singtel has also faced rising competition, with its shares slumping 15 per cent this year, while M1, the other established wireless carrier in the city state, has slumped 11 per cent.
To spark a rally, Mr Kaliaropoulos will have to address the consumer segment, including the pay-TV and mobile service that "casts a shadow on the whole business", said DBS Group Holdings analyst Sachin Mittal.