Starhub

Starhub: announced that it will commercially launch its LTE service offering on 19 Sep in the CBD, Changi Airport and Spore Expo areas in Spore. It expects to have more than half the island covered by 4Q12 and island wide coverage by 2013. In addition, it also introduced new service plans on 3G by cutting data bundle from 12 GB to 2 – 6 GB on entry level to mid tier plans. Citi notes that Starhub’s coverage will initially be very limited with nationwide coverage only by 2013 as compared to SingTel & M1 which will cover most of the island by 4Q12. This may explain why Starhub will initially discount its LTE services by pricing it the same as its 3G offers until Mar ’13, after which an additional $10.70/mth will be charged. Nevertheless, Citi finds the pricing plans to be disappointing, as it had expected faster industry price rationalization. Says to await for potential reaction from M1 to Starhub’s discounted pricing to protect its mkt share. The house reiterates Sell on Starhub, with TP at $3, in light of premium valuations and softer yield offer.