StarHub Ltd’s Pay TV Take-Up Rate Down: What Management Had to Say

StarHub Ltd (SGX:CC3) lost 10,000 Pay TV subscribers in its latest-quarter.

Two years ago – in the second-quarter of 2015 – StarHub had as many as 545,000 pay TV subscribers. From there, it lost 9,000 subscribers in the second half of 2015. Then, in 2016, StarHub saw another 38,000 subscribers leave its ranks. By the end of the second-quarter of 2017, the subscriber count was down to 477,000 or a 12.5% decline from its peak subscriber base.

The slide below summarises subscriber decline in the last five quarters:  

Source: StarHub’s earnings presentation

Starhub’s Chief Marketing Officer, Howie Lau, explained the reasons behind the fall:

“… we saw quarter 2 ending with 477,000 of subs. We do continue to see headwinds coming from alternative viewing means as well as piracy.”

Piracy remains a sticky issue for StarHub. Lau said:

“I think the piracy, we have seen different reports in the market of the increase in piracy. I was just reminded that in May I think Channel News Asia ran a report that unfortunately Singapore ranked number nine on a global level in terms of piracy. So there are different discussions initiatives undergoing, but this is a – not just a Singapore challenge but a global challenge that will need multiple initiatives. So the – I think it’s an area that we’re trying to work with different parties to see how we can help with the situation.”

Meanwhile, higher ad sales offset some of the declines in subscription revenue, Lau added:

“We do see a lower subscription revenue, but offset by a higher advertising revenue. The ARPU (average revenue per user) remains stable at $51, as we continue to retain the higher value customers.”

The slide below summarises the Pay TV revenue and ARPU figures over the past few quarters:

Source: StarHub’s earnings presentation

Lau’s mention of ARPU is a key point. In the fourth-quarter of 2016, StarHub chief Tan Tong Hai said pay TV appeals to high-ARPU Pay TV subscribers:

“We may have lost some subscribers, but this ARPU remains at $51, because it means that we still have I would say it’s the paying and loyal customers.”

Today, the pay TV appeals to the higher-ARPU customers.”

As it stands, StarHub has lost another 21,000 subscribers in the first-half of 2017. We will have to see what the next quarter brings.

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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 doesn’t own shares in any companies mentioned.