Starhub

Starhub: Management stated that broadband pricing competition is currently driven by smaller new entrant operators. But STH's strength lies in its ability to complement the broadband offering with content. Management also highlighted that STH's investments in international bandwidth should position the company well versus the competition. Service margins for fibre broadband would be lower versus cable broadband (e.g. the cable network is fully depreciated), but pointed out that a fibre broadband adoption grant from the government would support up to 2015. Management expressed optimism about the mobile business, which is benefitting from relatively rational competition. It expects the positive impact of tiered pricing to materialise in 2H13. DB views that the mobile sector dynamics will continue to improve, with better data monetisation and lower handset subsidies, potentially lifting sector margins over the near term. DB has a SELL rating, TP of $3.83; Starhub trades at forward yield of 4.6%.