What has been the key factor in making StarHub Singapore’s fastest growing operator?

StarHub was a start-up company, so it achieved very fast growth from an early stage. It was the third operator into the mobile market and second into the fixed space – so early growth was quite strong.

StarHub differentiated itself very strongly for its customer base in Singapore by bringing in new, challenging ideas, such as per second billing and IDD calls on mobile. That placed us as a brand that consumers wanted to be associated with. We then introduced TV as well, which became very popular within Singapore, so I think that helped us to grow.

The market is now pretty saturated. Mobile penetration is now 150%, broadband is about 105% of households; Pay TV is still pretty low, at about 50%. The growth opportunities going forward are going to be a bit more muted compared to the last 12 years or so.

How does StarHub intend to further increase its market share?

We are focusing on our Hubbing strategy, which is when customers take two or more services from us. We try to put that together in a package that offers benefits, and also increases retention. It used to be more about giving discounted benefits, but now it’s based more on what we are delivering to the customers.

We’ve launched our TV Anywhere Service – which means that all our content can be delivered across all devices and platforms to all the devices within a household. All members of the household can access that content in different ways, in different places, at different times. That’s the main driver of the consumer market.

In the enterprise market we are hoping the growth will come from the Next Generation Network which is being rolled out and sponsored by the government, to give us access to a lot more corporate buildings that we currently don’t have our own fibre network going into. That, coupled with our position in the enterprise market as the trusted supplier, will enable us to grow our market share in that area. The bulk of buildings that are now being accessed have been a SingTel monopoly for some time, so we think we can take a reasonable market share in that area.

Our own fibre networks are mainly located in the CBD, where the multinational and large local companies are based. We have about 30-35% market share of the enterprise business in those buildings. We now have access to another 20,000 buildings which is a significant number. We think the revenue in that is about S$1bn – so we think we can grow our market share by 20-30% in that area over the next 2-3 years.

How will consolidation affect Singapore and the rest of the region in future?

I don’t think we’re going to see too much consolidation. There are three majors operators: StarHub, SingTel and M1. It used to be just StarHub in pay-tv, but now SingTel has moved into that area too. We operate in residential and enterprise broadband – as well as mobile. M1 is now moving into other areas of the market, and will probably continue to do so.

There are a few smaller players in the broadband market which, going forward, I think will find it difficult to survive and compete with the larger players.

There will be three major players going forward, plus possibly room for one or two smaller players.

I think there will be increasing competition in the residential broadband space.

Where is the best space to make acquisitions?

Acquisitions in this region would potentially be shareholder value destroying. Typically the premium you have to pay to acquire a company is high and it takes a long time to turn it around. The growth in the region is no longer at the level it used to be.

If you went back 10-15 years in some of the developing countries, an acquisition or a new licence probably would’ve been a good idea, but these days I think it’s quite difficult to do that. We don’t think we’ll be looking at any other regional acquisitions in the near future.

Is StarHub’s quad player business model sustainable?

Not only is it sustainable, it’s ‘growable’. With our TV Anywhere strategy we can really extend the model. It’s not just a case of ‘take three services and get some discounts’, it’s ‘take these services and you get a different level of service - you get to see the content you want to see, or app you want to use – across any platform of any device, whether it be through cable, fibre or mobile.

What are your plans for raising finance?

In 2011, we established medium term note programme, which we’ve now issued $220m in that. It’s a 10 year program jointly arranged by ANZ and DBS. It’s set at 3.08%, so it’s very attractive. It really just covers the expansion of the LTE network, and some development of what we call our ‘media hub’ which is for our pay TV service. So we probably don’t need any further funding at this stage – I’d say we’re pretty much covered for the next 10 years or so.

What are the long term expectations of shareholders such as STT, Qtel, Temasek, NTT?

You’ll need to ask them! They’ve been with us a long time – and I think they’re obviously happy and satisfied with the returns they get from StarHub.

What are future plans for Nucleus Connect?

We want Nucleus Connect to continue to grow. We are the major customer of Nucleus Connect and we do own 100%. As it continues to grow, we want to see more integration with what StarHub is doing, as well as the other retail service providers that Nucleus Connect serves.

We do have some competition in that area though. Some of the players have established their own OpCos, but they don’t receive the government funding, so Nucleus continues to receive government funding and can offer attractive services to retail service providers. We are the biggest retail service provider – but not the only one.

What are the key ingredients for creating successful public private partnerships in NGNs?

The most important thing is to have a strong regulatory framework in place, and a sensible approach to address the issues.

We do have some concerns over the structure of the NGN – it’s important to make sure there are no dominant players in there. Currently, OpenNet is the NetCo and is government funded. This then sells to the OpCos, which includes the government funded Nucleus Connect. But OpenNet also uses SingTel as a key sub-contractor – which is also one of the major service providers already. So there is a little bit of a conflict there, but the government is trying to resolve the issues which it faces in that area.

How can this model be adapted in other geographies?

The way that it’s been structured in Singapore, with three layers, is probably not the ideal way to structure it. In different regions they will probably be looking at the structure in Singapore, but it’s unlikely that it will be adopted in the same way. The positive is, the system in Singapore is allowing access to fibre into 95% of people’s homes.