Towards Financial Freedom
StarHub - Roam Easy At a Single Rate
StarHub's latest move to introduce a single rate for data roaming is positive but not likely to reverse the structural decline in roaming revenue as data usage is likely to only see a less than proportionate increase. We maintain our NEUTRAL call on the stock as valuations are not undemanding at 19x FY14 EPS. The key share price re-rating catalysts are: (i) capital management, and (ii) stronger than expected results.
- ''Roam without bill'' shocks. StarHub has introduced Singapore's first single-rate for data roaming. This service charges a single roaming rate of SGD10/50MB for data when a postpaid user roams on any mobile network in 20 popular destinations overseas. This is significantly lower than the regular SGD20/MB rate, allowing users to utilize 100MB more data for the same rate. A postpaid subscriber will need to opt in via SMS provisioning to benefit from the reduced rate.
- Getting the data roamers back but not quite the voice. While the move should help to mitigate the erosion in roaming revenue, we think data usage may increase less than proportionately as it is still likely to be more cost effective for a subscriber to opt for Wi-Fi connectivity (for data) or purchase a local SIM card for voice calls when abroad. The promotion does not address the fall in roaming revenue for voice and SMS (from lower Malaysia and Singapore roaming rates), which have contributed to weaker roaming revenue as a whole for mobile operators. StarHub had previously indicated that roaming revenue makes up about 15% of its overall mobile revenue. The company has stopped recognizing inbound roaming revenue on its ARPU line effective 1QFY13 to better reflect the underlying mobile revenue generated by its own subscribers.
- NEUTRAL. Following the release of its 1QFY13 results recently, StarHub lowered its revenue guidance for FY13 to the 'low- single digit' from 'single digit', citing the weaker than expected showing. The stock remains expensive, trading at over 22x FY14 EPS and 19x FY14 EPS. We expect share price support to come from its decent dividend yield of 4.8%.
Source: OSK
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This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
