Will StarHub’s partnership with China Mobile boost earnings?

Device, global might benefit the most.

Though StarHub (STH)’s partnership with China Mobile plays a significant role in strengthening of STH’s relationship with a major telco player globally, the near-term financial impacts for STH are still up in the air.

According to a report by BNP Paribas, STH and China Mobile have inked a memorandum of understanding covering strategic cooperation in the areas of device, data business services, global roaming, network, the internet of things.

The two areas of collaboration which could potentially yield interesting results for STH are device and global roaming, given China Mobile’s procurement scale, significant subscriber base, and domestic network coverage.

Beyond these, however, the near-term financial impact of the collaboration is unclear. BNP Paribas further notes that it is difficult to get excited about STH’s near-term fundamental outlook with the looming threat of a new mobile operator and the increasing substitution risks for STH’s pay-TV services.

That said, downside risks are limited to the end-FY16 dividend. The report also views the corresponding 6% dividend yield attractive. Moreover, STH is currently trading close to its 5-year historical average EV/EBITDA.