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How Has StarHub Ltd’s Strategy To Protect Its Revenue Fared?

Back in July this year, StarHub Ltd’s (SGX: CC3) chief executive Tan Tong Hai was interviewed on stage at Invest Fair 2016. During the interview, Tan had eloquently articulated his Defend-and-Attack strategy when it comes to protecting and growing StarHub’s revenue base.

I thought it’d be important and interesting for investors if I took a look at how the strategy’s working.

When Tan was talking about the Defense component of his Defend-and-Attack strategy, he mentioned that StarHub’s aim is to provide reliable telecommunications service to its subscribers. But, StarHub’s broadband service ended up being disrupted in two separate days in the month of October.

As part of the Attack component, StarHub would localize popular entertainment content to attract more Pay TV customers. But as my colleague Chin Hui Leong recently noted, Starhub has lost 38,000 Pay TV subscribers in total between the second-quarter of 2015 and the third-quarter of 2016. The company’s Pay TV churn rate (rate of customers leaving) has also jumped from 0.7% in the third-quarter of 2015 to 1.0% in the latest quarter.

Another aspect of StarHub’s Attack strategy is its focus on enterprise customers. But, the company’s Enterprise Fixed business segment (the segment that targets enterprise customers) saw its revenue decline by 1.0% year-on-year during the third-quarter of 2016. This comes after the segment’s revenue had inched up by just 1.9% year-on-year in the second-quarter of the year.

In all, StarHub’s revenue in the first nine months of 2016 has slipped by 2.7% compared to a year ago.

Given all we’ve seen, it appears that StarHub’s Defend-and-Attack strategy hasn’t been working so well. It’s worth noting too that Singapore would see a fourth telecommunications operator enter the fray next year. What’s going to happen to StarHub’s business then? Only time will tell.

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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 Ong Kai Kiat doesn't own shares in any companies mentioned.