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More headwinds on the horizon for StarHub in FY16: report
Its subscriber base is steadily shrinking.
StarHub is going to have its hands full in FY16, as a waning subscriber base and shrinking adoption grant continue to pose a threat on the company’s profits.
According to a report by DBS, StarHub’s Pay TV business lost 8,000 subscribers to reach 528,000 as StarHub stopped its TV Lite promotions, leading to a slight dip in Pay TV revenue. In addition, Netflix entered the market early this year, so it could also be attributed to Netflix’s entry.
Meanwhile, the company’s broadband business lost 3,000 subscribers to reach 473,000 although revenue inched up slightly on back of increased ARPU from increased take-up of fibre broadband plans.
These drops in subscribers could spell disaster for StarHub, as they undermine the company’s hubbing strategy. To this end, DBS expects StarHub tp up the ante by being more aggressive in trying to retain or grow its subscriber base.
DBS also reports that the adoption grant may slip in the coming quarters. Q1 enjoyed $12.6m in “other income,” most of which came from adoption grant for fibre broadband take-up.
Management anticipates the adoption grant to fall in end-FY16, while DBS estimates that “other income” could tumble to $26m in end-FY16, from $46.5m in FY15. As such, subsequent quarters would likely see smaller adoption grants going forward.
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