StarHub

StarHub | Hold

Aug 23 close: S$1.66

Target price: S$1.82

Broker: UOB Kay Hian, Aug 23

New chief executive officer Peter Kaliaropoulos has outlined strategic priorities and key initiatives to leverage on the group's consumer and enterprise businesses.

Management treats competition from TPG Telecom seriously. StarHub will vigorously defend its base of high-value mobile subscribers, despite increased competition.

Mr Kaliaropoulos sees average revenue per user challenged by the proliferation of SIM-only plans.

Management sees room for consumption of data to increase as Singapore has not been hit by the video tsunami yet, citing markets where average data consumption is 80GB, compared with 5GB in Singapore.

On the pay-TV front, it intends to work towards a variable cost model for content.

Fixed enterprise is the main engine of growth, driven by cyber security as well as managed services, and enables cross-selling connectivity services.

The group expects the telco industry to consolidate in two to three years as smaller players burn cash, and it is inefficient to have multiple duplicated 5G network infrastructure.

StarHub's dividend yield is attractive at 9.6 per cent for this year, but could drop to 7.2 per cent next year, and 6 per cent in 2020.

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