Excerpts from analysts' report
Deutsche Bank analysts: Srinivas Rao, CFA, Peter Milliken, CFA & Pei-Yu Loo
Price at 9 Nov 2015 (SGD): 3.63
Price target - 12mth (SGD): 4.05
52-week range (SGD): 4.46 - 3.44
StarHub (STH) hosted a meeting with non-executive Chairman Terry Clontz and CEO Tong Hai. Terry has been CEO of Starhub in the past, and is currently involved with numerous telecom ventures across the world.
Key takeaways from the meeting:
1) IoT will not be a big opportunity for telcos - Telcos will be able capture only a fraction of the value of the IoT opportunity. Many use-cases for IoT will involve low-power devices transmitting on wifi or bluetooth which may not require a cellular network. Terry indicated it would a big risk for telecom companies to invest and build internal competencies in the IoT space. A better strategy would be to partner 'platform companies' such as Jasper which are closely involved in the IoT ecosystem.
5) Overseas opportunities - STH does not see any major opportunities in overseas markets. In the current environment, it is very difficult to buy a mobile or cable network and build value. Further, any greenfield opportunity is pursued by a horde of players which reduces any excess value.
6) Fourth operator - Terry believes the business case is fairly challenging for a new player. Further, Consistel's claim to build a mobile network at a materially lower cost seems improbable. Mobile networks are generally based on industry standards and hence it is difficult innovate using proprietary technology platforms.