Starhub analysis

INDUSTRY ANALYSIS

Generic Characteristics of Telco Industry
 Market structure is either a:
 Monopoly
Natural monopoly
 Oligopoly
Dominated by a handful of big players
 High capital expenditure (capex)
 Absolute fixed cost is high
 But fixed cost per user is very low
 Telco may be very cash flow rich if capex is controlled
 Low operating expenditure (opex)
 Average cost per user is very, very, VERY low.

Generic Characteristics of Telco Industry
 Lines of business
 Voice
Traditional fixed lines overtaken by mobile
Some households do not even have fixed lines
i.e. M1 gives free fixed line with fibre plan
Lucrative international dialing business is largely gone Replaced by data i.e. Skype, VOIP etc.

Generic Characteristics of Telco Industry
 Lines of business
 Data
Escalating bandwidth demand (geometric growth)
Some business models have failed as a result
Unlimited mobile data plan replaced by tiered pricing plans
Reasonably priced unlimited fixed broadband/fibre still available in some countries (not so in the US).
Price differentiation between home and business data plans Sub segment differentiation exists – gamers (low latency) Telcos need data to make up for loss revenue in voice business Generic Characteristics of Telco Industry
 Lines of business
 Pay TV
Telcos offering pay TV not common for all countries. Exists in Singapore.
Always a balancing act between controlling cost of content and charging viewers more
Cost is increasing for developed countries
» Not so for developing countries…..
Video on-demand new business model
Don’t pay for a whole channel, just pay for the
TV program you want
Mio TV vs Cable TV

Generic Characteristics of Telco Industry
 Strategy for non-saturated markets
 Build out infrastructure and coverage while controlling capex
 Gain market share by grabbing customers
Especially in underserved markets
 Attempt to lock in existing