Telco

Telco: UK Pay-TV players have been more resilient than US counterparts. Pay-TV players in US have been losing subscribers to Netflix and other over-the-top players, resulting in lower profitability.

Singapore is a much smaller market with robust free-to-air TV, and regulatory requirements may add further costs to Netflix. As such, Netflix is likely to partner with existing Pay-TV players to enter Singapore.

Channels such as HBO and CBS have gone online and are available for a monthly fee to anyone in US with a broadband connection. DBSV believes customers might subscribe to their favourite channels online directly unless Pay-TV players offer compelling in-house content as part of their Pay-TV package.

Aided by government grants, StarHub already produces some local content in Mandarin and other languages catering to certain niches. The company needs to produce more compelling content in the long term.

DBSV maintains Fully Valued on M1 (TP: $2.60) and StarHub (TP: $3.30).