StarHub

StarHub: UOBKH expects pricing erosion for residential broadband as STH seeks to protect its existing subscriber base to fend off attractive offers from SingTel and M1. Resi broadband ARPU fell $3 to $39 in 1Q14, helping StarHub gain 7,000 subscribers y/y but revenue declined 4.3% y/y in 1Q14. UOBKH expects ARPU to drop another 11.5% to $34.5 over the next 12 months. In addition, UOBKH believes that saturation point is approaching in the pay TV market, with penetration rate of 81.8%. The market expanded by only 1.8% in 2003 with growth mainly from SingTel’s mioTV. Market was a standstill in 1Q14 as both STH and SingTel did not add new subscribers. SingTel was more successful in increasing ARPU by 41% y/y to $35 in 1Q14 by broadening portfolio content. UOBKH maintains Hold on STH with lower TP of $4.33 from $4.48