Should Starhub Ltd Investors Freak Out Over the Loss of 17,000 Pay TV Subscribers?

Telecommunications outfit StarHub Ltd (SGX: CC3) reported its 2016 first-quarter earnings recently. During the earnings briefing, StarHub’s Pay TV segment received extra attention

The scrutiny could be for good reason: The segment made up over 16% of the telco’s total revenue in the quarter and had lost 17,000 subscribers when compared to the first-quarter of 2015.

StarHub Pay TV segment
Source: StarHub’s Earnings Presentation

In his opening statement, StarHub’s chief executive Tan Tong Hai said that the loss was due to the company stopping its TV Lite promotion. Later on, Howie Lau, StarHub’s chief marketing officer, added this statement:

“As you know, we stopped the promotion of the TV Lite and we do expect that the remaining TV Lite will see the impact for the next two quarters. What we do recognise as well is that the customers continue to focus on two main things.

One is the quality of the content, which we are very focused on and the second is having an option in terms of the way they would like to view it. So obviously besides having the traditional pay TV offering, we have our own TV offering called ‘StarHub Go’.”

The question in investors’ minds could be whether the launch of internet TV services in Singapore, such as Netflix, had an influence in StarHub’s subscriber loss. Lau had some thoughts on the matter to share:

“We’re the only pay TV operator that provides this high definition quality viewing on Netflix and you may have also read that we’ve announced that we will also make BBC iPlayer available in the later part of the year. So while we stopped promoting TV Lite, we are continuing to stay focused on providing the right content as well as a variety of platforms.”

Ultimately, StarHub could be looking at rationalising its Pay TV offerings and providing services such as Netflix. Lau explains:

“We offer both the linear as well as the OTT [over-the-top] offering – what we’re observing is that different types of contents and different customer segment groups tend to lean towards different type of combinations. So we actually see it more as complementary.”

It would appear that StarHub’s subscriber loss will continue for the next couple of quarters. At the moment, it is not clear whether services such as Netflix has had an impact on the telco’s Pay TV segment.

But this question may arise again if Starhub continues to lose Pay TV subscribers in the next year and beyond.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Chin Hui Leong owns shares in Netflix.