StarHub Ltd’s Pay TV Business is Under Pressure: 3 Key Things Investors Should Know

It is no secret that StarHub Ltd’s (SGX: CC3) pay TV business is under pressure.

In the telco’s latest annual report (for 2016), this matter was featured in the management’s discussion section, a column in which the company’s leaders seek to address the most pressing questions about the business. It’s an admirable effort, and one worth reading through.

With this in mind, here are three key thoughts from StarHub’s management on the company’s pay TV business.

1. A major shift in customer preferences

StarHub’s chief executive officer, Tan Tong Hai, said:

“On the pay TV front, we have seen a major shift in the viewing habits of our customers. We are facing growing challenges from increasing availability of OTT [over-the-top] video streaming options and alternative pirated content sources.”

Online streaming options such as Netflix has proved to be a viable alternative to StarHub’s pay TV service. Tan also called out piracy as another impediment to the business.

2. Change is afoot

Chief marketing officer, Howie Lau, said:

“As the leading pay TV provider in Singapore, we will continue to improve our content and modes of views as our customer consumption behaviour changes.”

StarHub’s pay TV subscriber base is shrinking, but it is still the largest pay TV service provider in Singapore. The telco has been adjusting its channels and content to fit the consumption behaviour of subscribers. When certain channels are dropped, it could lead to further subscriber losses. But, StarHub has its eye on getting the best margin out of the business.

3. TV everywhere

Lau also added:

“We have constantly enhanced our content offerings as well as to offer alternative modes of watching content like StarHub Go where customers can watch their favourite contents on their mobile devices.

StarHub post-paid customers would further benefit as data usage from StarHub Go viewing would not be chargeable.”

StarHub GO is the telco’s mobile streaming service that allows subscribers to catch programme episodes and movies when they are on the go. The telco is also leveraging on its mobile network, such that video content viewed on its network is not charged to its subscribers’ data limits.

Editor’s note: An article featuring three additional thoughts from StarHub’s management on the company’s pay TV business has been published. It can be found here.

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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.