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3 Ways StarHub Ltd Is Gearing Up For the Coming Mobile War

A fourth telco may be arriving in Singapore soon, heating up the competition.

In a recent interview, StarHub Ltd’s (SGX: CC3) chief financial officer Dennis Chia gave a candid assessment on the competition that a fourth telco in Singapore’s mobile space could bring. Chia said:

“Whether you want to label it a price war or not – certainly it is an unpleasant term – the value-add is through accretive pricing at the onset. As the new kid on the block, it will not be able to offer anything better in terms of network quality.”

In his view, the combination of a crowded mobile space and a new telco could lead to competitors resorting to price wars. This raises the question: How will StarHub protect its house?

The Hubbing difference

Chia expects the fourth operator to offer mobile and broadband services for consumers alone. He felt that the potential competitor will lack the relevant infrastructure to compete in the pay TV space or to take in enterprise customers.

This is where StarHub could possibly differentiate itself.

The company’s Hubbing strategy sees StarHub bundle different services (including pay TV) and offer discounts to customers. The fourth operator might not be able to do the same. Tan Tong Hai, StarHub’s chief executive, also stressed the importance of the Hubbing strategy in a recent earnings briefing:

“The Hubbing remains a very important part of our overall strategy because it clearly differentiates us and we will continue to drive the Hubbing household.”

Beyond this, StarHub plans to do more for its pay TV services as well.

Original content

Earlier this year, StarHub took a 9.05% stake in mm2 Asia Ltd (SGX: 43D), an original movie content creator. In the announcement regarding the investment, Tan explained the rationale behind the move:

“Taking a stake in mm2 is a strategic move.  It unlocks opportunities to expand our pay TV offerings through original content creation that will set us apart in the cluttered content space.  mm2 can also potentially extend the reach of our localised content through marketing and distribution efforts beyond Singapore shores.

In addition, we may choose to tap on mm2’s cineplex business to showcase our content, as well as gain access to top-rated concerts and artistes through UnUsUaL of which mm2 is looking to own a stake.”

StarHub has been partnering mm2 Asia since 2012. Original local content may help it differentiate itself from other online streaming services. StarHub could be taking a leaf out of the Netflix playbook. The US-based internet TV streaming service provider has been releasing original content on its services since 2012.

Big data

The other area of interest would be the enterprise space. StarHub is focusing on big data and analytics as a growth driver. Chia said:

“We want to leverage our advantage in making sense of the data that we have, getting better logic out of that data, and generating business for ourselves and our partners.”

As Chia noted earlier, enterprise services might be an area where the fourth player will have trouble competing in.

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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.