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StarHub confident of home broadband retention

Singapore telco expects bundled tripleplay consumer deals to stave off oncoming competition from country's next-generation broadband network.
Written by Victoria Ho, Contributor

SINGAPORE--As the clock ticks toward the rollout of the next-generation national broadband network (NBN), local carrier StarHub remains upbeat about its existing cable broadband customer base.

Scheduled to light up in April this year, the national fiber-to-the-home (FTTH) network is expected to pose competition to StarHub's cable broadband service.

The carrier does have a significant role in the NBN, however, with its Nucleus Connect consortium that won the role of OpCo last year to sell wholesale broadband connectivity to downstream operators.

StarHub's new CEO Neil Montefiore, said during the company's 2009 financial results briefing here Thursday, the telco is expecting to target businesses with the NBN. He added that the company would also stand to gain from other operators that have expressed interest in providing commercial broadband services, since they would first have to buy broadband connectivity from Nucleus Connect.

StarHub COO Tan Tong Hai said Singapore's residential broadband ARPU (average revenues per user) has come down to S$49 (US$34) in the fourth quarter of 2008, from S$57 (US$40) in the same quarter the year before.

This figure will stay low with impending competition from the NBN, said Tan. He noted that StarHub is expecting its MaxOnline home broadband service, which in the fourth quarter of 2009 crossed the 400,000 subscriber mark, to remain popular through bundled deals with StarHub's other services, in particular, cable TV.

"Our plan will be to support both [residential and commercial broadband offerings]," said Tan, adding that here will be "no forced migrations" of cable users to fiber.

iPhone an "investment"
Similar to rival operator MobileOne's financial results announcement two weeks ago, StarHub also trumped its sales of the Apple iPhone. Both operators began selling the device in December 2009, following in the footsteps of local incumbent SingTel, which had started selling it in August 2008.

The smartphone drove StarHub's overall average acquisition cost to increase from S$74 (US$52) per connection in the third quarter of 2009, to S$106 (US$74) due to the costs of subsidizing the handsets, which sold well, said Tan.

Nonetheless, its investment in the iPhone is expected to translate into long-term gain for StarHub, in terms of data revenues, he said.

Montefiore added that the telco typically recovers its handset subsidies between two and six months.

Overall, StarHub's full year operating revenue for 2009, ended Dec. 31, increased 1 percent to S$2.15 billion (US$1.5 billion), and its earnings increased 3 percent to S$320 million (US$226 million), over the year before.

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