StarHub is on a mission to beef up local content: RHB

It’s sealed the deal with MM2, China Mobile.

StarHub (STH) is bolstering its local content with its back-to-back contracts with mm2 Asia (MM2) and China Mobile (CM).

According to a report by RHB, STH $18.04m investment for a 9.05% stake in MM2 should boost STH’s local content production capability and delivery. The investment will also further differentiate STH’s pay-TV franchise through original content creation to compete with the likes of over-the-top (OTT) streaming services.

“We believe this is consistent with management’s strategy to reduce the reliance on imported content, which has seen significant cost escalations in recent years,” the report asserts.

In addition, STH is expected to enjoy its five-pronged collaboration with CM through the reciprocal roaming arrangement, as STH is the exclusive roaming partner in Singapore for CM and vice versa.

Further, while inbound roaming revenue/traffic from Chinese travellers has kept and is likely to keep expanding, it is still not a significant portion of the estimated 15% of mobile revenue that STH derives from roaming—the bulk still comprises Malaysian/Singaporean travellers shuttling between both countries.

Other positives from the STH and CM deal include procurements savings from network equipment and handsets/devices, given CM’s significant scale advantage.

RHB cautions, though, that though both these deals are longer-term positives, they will have little impact on mid-term earnings. This is due primarily to competitive headwinds from a fourth mobile network operator, as well as an anticipated contraction in STH’s FY16 earnings will contract with the exhaustion of the fibre grant.