Record High

StarHub shares rose 0.9 percent today, closing at record high of S$3.52 while the benchmark Straits Times Index dropped 1.7 percent. StarHub extended the gains this year to 21 percent, outpacing bigger competitor SingTel’s 7.1 percent advance and smaller competitor M1 Ltd. (M1)’s 1.2 percent increase. StarHub rose 11 percent last year and 22 percent in 2010.

Trading at 18 times its estimated earnings, StarHub is the most expensive phone company in the city-state. The company offers investors a dividend yield of about 5.7 percent, better than the 3.7 percent average for the 30 companies on the Straits Times Index.

“Definitely it’s the most expensive phone carrier in Singapore, but I’ve had a buy rating for so long because I was looking at its capacity to pay more dividend,” said Maybank Kim Eng’s Yap. Five of 23 analysts tracking StarHub have a buy rating on the stock, with 15 recommending investors hold, and the rest with a sell rating.

The next generation of wireless networks use a standard called long-term evolution, or LTE, which offers higher up- and download speeds and latency, or response time, that’s three times quicker on average than previous technology.

Smartphone Users

Singapore Telecommunications, also known as SingTel, last month unveiled its 4G services in the country, offering the network through three handsets: HTC Corp. (2498)’s One XL, LG Electronics Inc. (066570)’s Optimus LTE and Samsung’s Galaxy S2 LTE, it said in a June 4 statement.

‘Game Changer’

35-Year Veteran

A veteran with more than 35 years of experience in the telecommunications industry, Montefiore joined StarHub in January 2010 as its CEO. Before that he was the head of M1, the country’s No. 3 phone operator. Montefiore is a permanent resident of Singapore, according to the company’s website, and has lived in the city for 16 years.

Singapore phone companies have been offering 12-gigabyte mobile-data subscriptions for S$10 to S$15 per month and this has cannibalized their voice and text-messaging revenue, DBS Vickers said.

Besides the corporate data services business, Montefiore said he is optimistic mobile revenue will continue to grow by bringing the company’s pay television content to handsets and other devices. He may also introduce so-called tiered pricing for wireless data, where customers pay for usage based on actual consumption.

“We just need to get the revenue-growth tied to the data usage,” Montefiore said.

To contact the reporter on this story: Jonathan Burgos in Singapore at jburgos4@bloomberg.net

To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net

Starhub: Maintain NEUTRAL

DMG & Partners

We hosted Starhub at our recent Asean Conference in Singapore where the telco

recorded a good number of meeting requests. Discussions were centered on the

upcoming bid for the 2013-2016 broadcasting rights to the BPL, capital management

and data monetization efforts. There were no major surprises with management

reiterating the need to maintain sufficient cash buffer in view of the uncertain industry

dynamics. Starhub’s share price has re-rated on yield attraction but we think further

upside may be capped by concerns over margin dilution from the BPL and steep

device subsidies. We remain NEUTRAL on the stock but up our FV to SGD3.30 from

SGD2.80 after lowering our Weighted Ave Cost of Capital. 



 

device subsidies. We remain NEUTRAL on the stock but up our FV to SGD3.30 from

SGD2.80 after lowering our Weighted Ave Cost of Capital.

  We hosted Starhub at our recent Asean Conference in Singapore where the telco