StarHub: announced that it will hike its monthly pay TV packages by $2 (before GST) wef 1 Aug ’11, citing rising content costs. This will be its first since FY07, when it raised basic subscriptions by $4 and doubled its sports package fee from $8 to $15, with the addition of costly EPL content. Starhub has since added added 15 channels to its basic tier plan. An entry-level cable TV plan is currently priced at $25.68 (incl GST)...
Cable TV accounts for <20% of StarHub’s total revenues.
Citi estimates this would lift pay TV ARPU levels by ~4%, and in turn increase group earnings by 0.4-0.8% for FY11-13, assuming no subscriber migration on account of content exclusivity. Raises TP marginally to $2.69 from $2.68, and keeps Hold rating. Notes compared to domestic peers, StarHub offers the most expensive valuation and weakest fwd earnings CAGR...
CIMB maintains Underperform with TP $2.42.
Deutsche however maintains at Buy with TP $3, likes the preferred telco for its attractive and sustainable 7% div yield.
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