SingTel draws competitor flak for free World Cup 2014 offer

StarHub questions offer for contract extenders.

SingTel has clinched the exclusive broadcast rights for 2014 FIFA World Cup Brazil, and plans to offer it at S$105 for its standalone pricing, drawing criticism due to the increase from the $88 pricing four years ago, according to an OCBC Investment Research report.

But SingTel has offset this by offering it free on a conditional basis for subscribers extending their contracts, with StarHub complaining that the move "runs counter to the cross-carriage regime's objectives."

Here's the full analysis from OCBC Investment Research:

Secures 2014 FIFA World Cup on exclusive basis. SingTel has recently won the 2014 FIFA World Cup Brazil broadcast rights on an exclusive basis. This means that it will have to cross carry the content of the month-long tournament with rival StarHub. SingTel said it has also finalized a deal to share the World Cup through free-to-air coverage for key matches (opening, both semi-finals, and the final). SingTel said it is working with the People’s Association (PA) to bring the matches to community centres and is still working out the number of matches.

Prices package at S$105 before GST. The standalone pricing for the World Cup 2014 will be S$105 (before GST) for both mio TV and StarHub customers. Recall that way back in 2006, StarHub offered the World Cup package at S$15.75 (Sports Group customers) and S$26.25 (for those not on Sports Group). And when both SingTel and StarHub jointly won the bid in 2008, the subscription was S$88. Not surprisingly, the hefty increase has drawn some outcry from football fans.

“Free” for those extending contracts. But SingTel will offer the World Cup for free to customers who either sign up or recontract with mio TV for mio Stadium+ or Gold Pack packages (with a two-year lock-in period). We understand that StarHub customers with existing BPL contracts are also eligible for the free offer if they extend their contracts. However, StarHub has questioned the move, saying that the offer “sets a precedent for operators to acquire exclusive content at high prices to lock customers into extended contracts, which runs counter to the cross-carriage regime's objectives."

Maintain BUY with S$3.74 FV. In any case, we do not expect the event to have much of an impact on SingTel’s FY14 performance. For now, we continue to maintain our BUY rating on the stock with an unchanged fair value of S$3.74.