Receive $80 Grab vouchers valid for use on all Grab services except GrabHitch and GrabShuttle when you subscribe to BT All-Digital at only $0.99*/month.
Find out more at btsub.sg/promo
[SINGAPORE] StarHub Ltd, 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 city-state's No 2 telecommunications company is grappling with the emergence of a fourth mobile-network operator, TPG Telecom Ltd.
According to StarHub, the worst-case scenario is for the Australian winner of the new license to offer unlimited data, bundling the promotion with broadband. TPG didn't immediately respond to an email seeking comments. StarHub offers mobile phone, broadband and pay TV services.
"The margin in that segment is already under pretty 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, the broadband and the TV, the analytics generate a lot of interesting data, and we've realised that such information is very useful for our corporate clients."
Corporate customers accounted for 42 per cent of StarHub's revenue last year, more than double from eight years ago, according to the company. 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 declined to give a forecast for its revenue contributions.
The company says it competes on data analytics with Singapore Telecommunications Ltd, 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," Eugene Chua, an analyst at OCBC Investment Research who has a sell rating on the company, said in an email.
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 incumbents this year, and 14 out of 22 analysts who cover the company have a sell recommendation, Bloomberg data shows. Smaller rival M1 Ltd has gained on optimism its major shareholders are considering selling their stakes.
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.
The company has a leverage ratio of about 0.8, which gives it a "fair bit of headroom" to finance more acquisitions in the future, Mr Chia said. A ratio of slightly higher than two is likely to be "generally" acceptable to the market, he said, pointing to other Asia phone companies.
The mobile-network operator announced plans to purchase a 51 per cent stake in cyber security solutions provider Accel Systems & Technologies Pte and shares in media content company mm2 Asia Ltd in the last two months.
"A lot of people don't understand our enterprise strategy, they look at us and think the fourth player is going to cannibalise your business," Mr Tan said.
"The hidden asset is actually the data analytics, and we've been using this now to complement our enterprise business."