StarHub's Pay TV throne feared to be taken over by SingTel

Good thing StarHub is now 'flushed with cash'.

According to Maybank Kim Eng, with more than SGD500m in its bank account, StarHub’s annual DPS of SGD0.20 is now significantly more assured.

Here's more from Maybank Kim Eng:

We also think there will beroom for the telco to raise ordinary dividends to SGD0.22, inline with our forecasted EPS, from 2013 onward.

Plenty of cash to meet capex needs. With the SGD220m bond issue last year, StarHub is now flushed with cash. Assuming SGD150m goes to the 4G spectrum refarming auction expected to be held this year, that still leaves SGD70m for possible BPL content cost in the event that StarHub decides to cut a deal with Premier League Football Association.

Further, with net debt/EBITDA at the lowest point since 2006 and way below its comfort level of 1-1.5x, there is room to gear.

Opportunity – data monetisation. Data monetisation should be a strengthening catalyst in 2013. Migration to 4G should grow at a fast clip as users will very likely recontract to 4G tiered plans once their bundle contracts expire given the zero 3G/4G price difference.

When enough users migrate to 4G and find the minimum data tiers too restrictive, they are likely to pay more for higher data caps.

Threat – challenger to the Pay TV throne. SingTel’s mioTV has beefed up its content lineup significantly with the addition of more sports (next three seasons of BPL renewed) and English entertainment programs (added 40 Fox International channels). We will likely see SingTel’s market share in Pay TV continue to grow from the current level as it continues to add content.