SingTel's EPL win 'not profitable', but ups ante

Singapore carrier's winning bid to broadcast football league likely won't make profit but will drive up subscriber base to rival StarHub, says Frost & Sullivan.
Written by Liau Yun Qing, Contributor

SINGAPORE--Local carrier Singapore Telecommunications (SingTel) "will not make a profit" from winning the rights to broadcast the English Premier League (EPL), but it can prove a critical tool to boost subscriber numbers for its mio pay TV service, says analyst.

In a report released Monday, Adeel Najam, analyst for Asia-Pacific ICT practice at Frost & Sullivan, said the content acquisition will boost SingTel's IP-based mio TV to become the "number one sports offering in Singapore". The local telco will then be able to compete more aggressively with the country's dominant cable TV provider StarHub, which currently has 85 percent share of the country's pay TV market, Najam said.

Frost & Sullivan estimated that SingTel's winning bid came a price range of S$300 million (US$215.19 million) to S$400 million (US$286.92 million), securing the operator rights to broadcast the EPL over the next three years. The projection takes into consideration StarHub's previous bid, Starhub's mindful balance between price and cost, as well as the single bidding round.

This recent content coup will enable SingTel to double its ARPU (average revenue per user) to reach S$45 (US$34.43) by 2013, Najam said, coming close to StarHub's current ARPU for its cable TV service.

Frost & Sullivan noted that SingTel is expected to add 231,000 subscribers in 2010 alone, with sports fan tuning into mio TV to catch the EPL. These numbers include 90,000 subscribers who are expected to switch from StarHub, 100,000 subscribers who will retain their StarHub subscriptions and the rest are anticipated to be new subscribers to pay TV service.

However, the costly investment that allowed SingTel to grab the broadcast rights from StarHub will make it more challenging for the former to turn its pay TV business profitable, Najam said. He added that other risks SingTel might face include consumer backlash and regulatory scrutiny.

The analyst noted that current StarHub sports subscribers are unhappy over the outcome of the bid, as they will not be able to view EPL and other sports content unless they sign up for SingTel's mio TV service. They will also have to install a SingTel fixed line before they can subscribe to the pay TV service, he added.

In response to public concerns, Singapore's Media development Authority issued a statement Friday on its Web site that it is monitoring the situation. The country's content regulator said it asked SingTel to "provide clarity on the pricing of their sports package" and StarHub to address questions over whether termination charges will apply to subscribers who wish to switch subscription plans.

SingTel promptly issued press statement Oct. 10 that it would charge S$23 (US$16.50) a month for the EPL. Its local CEO Allen Lew said in the price tag is almost 60 percent lower than previous rates.

According to Frost & Sullivan, content-based differentiation is not the right step forward for a retail service provider as Singapore is working on its national next-generation broadband network. The research firm said market players should instead focus on services-based differentiation and reduce the price of pay TV services.

It added that Singapore has a relatively low pay TV penetration among developed countries, and spikes in cost and lock-in content could have been easily avoided in this period.

Since the launch of mio TV in 2007, StarHub's annual growth rate dipped to below 4 percent. Frost & Sullivan predicts the cable TV operator will see a 3.3 percent increase its current subscriber by end-2009 but will see a 13 percent dip by end-2010. SingTel's mio TV subscriber base is expected to hit 348,000 by end-2010, giving the carrier 42 percent share of Singapore's pay TV market.

As of June 2009, StarHub has 530,000 cable TV subscribers while SingTel has over 100,000 mio TV customers.

SingTel had attempted but failed to win the broadcast rights for EPL in 2007.

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