BUSINESS
REVIEW

CONSUMER chiarman image

ELEVATING
CUSTOMER
EXPERIENCE

What we achieved in FY2019

The Mobile, Pay TV, and Broadband sectors have attracted new players over the last few years, leading to intensified competition amidst rapid technological advancements and disruption. In line with our company-wide transformation journey, we are enhancing the way we engage our customers through refreshed offerings under the Hello Change brand promise, as well as optimising the way we work.

Our Consumer business has three main product lines, Mobile, Pay TV and Broadband. Our challenges and strategies for all three businesses evolve around two key themes: digitalisation and innovation.

On digital transformation, we seek to be more efficient and effective in engaging and transacting with our customers through our digital channels. We have enhanced our digital touchpoints – our website is now more user-friendly and our improved My StarHub app was rated 4.5 out of 5 stars on both the Apple App and Google Play stores. We halved the time customers require to complete a transaction online, and our online sales have doubled year- on-year.

On continuous innovation, we kept a close ear to the ground, listening to our customers whose lifestyles have changed and digitalised. We understand consumers’ preference for simplicity, flexibility and great value – key elements that shaped our Hello Change campaign, which resonated soundly with the market over FY2019.

To better reward our subscribers in a more interactive way, we’ve introduced a new digital loyalty programme built into the enhanced My StarHub app. This new platform empowers StarHub to build highly configurable and personalised engagements quickly, reduces time- to-market, and provides customer insights and preferences that could be built into future customer engagement campaigns, instantly gratifying customers for their actions and deepening online and offline engagement levels.

True to the heart of our challenger spirit, improving the customer experience is our long-held obsession and we are glad to report that we have managed to do so even more following the introduction of the “Hello Change” campaign that brings new and disruptive offers to customers.

Apart from improved Net Promoter Score (“NPS”), we have seen a marked improvement in our scores for the Customer Satisfaction Index of Singapore (CSISG) in 20191, an established barometer of customer satisfaction. For the sixth consecutive year, we have emerged top for the Pay TV category; was an equal first and most improved for the Broadband category; and most improved for the Mobile category. Our retail operations have also been recognised for superior service, having won multiple awards from the Singapore Retailer Association in FY2019.

Moving into the future, 5G is no longer just a possibility but an eventuality – we have submitted our joint bid with another MNO for a nationwide licence on 17 February 2020. While there are details to finalise, such as licensing and operating arrangements, StarHub is excited on the innovative solutions that are enabled due to 5G capabilities, and will continue to be a frontrunner in this space.

Over two days in December, we unveiled a “pop-up” 5G showcase at our StarHub Green headquarters, providing a hands-on 5G experience to stakeholders and members of the public. We created four experiential zones to help customers visualise what 5G can do. First, cloud gaming, to show how smooth and responsive the gaming controls are over a streamed-game. Second, Fixed Wireless Access (FWA) at home, which will offer unprecedented speeds and “plug-and-play” capabilities without fibre set-up complexities we have to navigate today. The third demonstration, multi-party video conference, shows how seamless group video calls can possibly be with 5G’s high speed and low latency capabilities. Last but not least, we showed how security personnel, armed with augmented reality glasses and backed by facial recognition technologies, can ensure better, quicker screening of visitors and thereby improve physical security.

December 2019 5G pop-up showcase with four experiential areas.

The showcase was powered by Singapore’s first 5G Cellular-on-Wheels (“COW”) running on the 3.5Ghz trial spectrum. The 5G COW, running a mobile network ten times the norm now, is a continuation of StarHub’s fine tradition: we were the first telco to put together a similar demonstration for both 3G and 4G as well.

1 Customer Satisfaction Index of Singapore – Retail and Info-Communications, 2019 Q1 Scores, 27 June 2019.
Chief Executive message

For the sixth consecutive
year, we’ve emerged top
for the Pay TV category;
was an equal first and most
improved for the Broadband
category; and most
improved for the Mobile
category.

Mobile

Even as we actively pursue growth in other areas, StarHub’s mobile business remains the largest revenue contributor. This is a market where we face growing competition but we have demonstrated resilience by continuing to delight customers with our innovative offerings as the preferred challenger brand.

We continue to invest in our network, which powers our customer’s mobile experience – a ubiquitous influence in our lives today. Outshining the competition by a significant margin, we clocked the fastest mobile data speeds and is Singapore’s fastest telco in Singapore for 20192.

We have placed customers at the heart of our new Hello Change mobile plans launched in December 2018, removing fees that are known to drive customers away, such as caller number display and international roaming surcharges that are now standard offerings in all our plans.

We are constantly refining our products and services so customers can enjoy simple and transparent offerings. In February 2019, recognising that mobile data consumption growth is unsatiated, we announced a new 50GB add-on plan for just $20 per month for all postpaid plans.

The positive results of what we changed in our mobile offerings were very apparent, very quickly: NPS for our mobile customers jumped 130% year-on-year.

In June 2019, we launched giga!, a distinct mobile digital brand that allows StarHub to compete deftly in this dynamic space, delivering a simple and seamless end-to-end digital experience appeals to digital natives. The process starts with an electronic-Know Your Customer process where the user is verified, and the SIM-card is then delivered straight to the customer’s doorstep. We have seen good growth in giga!’s subscriber base since it was launched, its NPS is also the highest in the market, validating our move to target this new addressable market segment that is a result of changing consumer behaviour.

Concurrently, we are looking into ways we can create new revenue streams via value added services or collaborations that will enrich the customer experience. Cognisant of increased migration of prepaid customers to SIM-only plans, we beefed up the post-market support for our SIM-only customers, who tend to invest in top-end mobile phones for the best digital experience. In December 2019, we extended the SmartSupport service to SIMonly customers who can enrol for the service via our My StarHub app. This is an affordable option for this segment of customers who are not eligible for handset subsidies to swap or repair faulty handsets, especially useful in unforeseen circumstances.

Overall, the mobile industry in Singapore recorded an erosion of ARPU across the board in FY2019. This was reflected in the decrease of our postpaid ARPU to $40 in FY2019 from $43 in FY2018 that contributed to an overall decline in FY2019 mobile revenue to $765.5 million from $824.5 million a year ago.

While there is a need to remain competitive, our immediate priority is to stabilise the performance of our mobile segment, and we have reaped results in the last quarter. Comparing 4Q2019 to 3Q2019, postpaid ARPU have lifted to $40 from $39 and mobile revenue rose to $190.9 million compared to $190.0 million.

Moving into FY2020, we seek to continue stabilising, or even improving, our performance indicators to remain resilient amidst the anticipated entry of the fourth operator. We will continue to defend our market share by offering the best value proposition for our subscribers.

2 Infocomm Media Development Authority, IMconnected report (January 2019 to June 2019).
Chief Executive message

We continue to invest in
our network, which powers
our customer’s mobile
experience – a ubiquitous
influence in our lives today.

2 Infocomm Media Development Authority, IMconnected report (January 2019 to June 2019).
Pay TV

It was a transition year for our Pay TV business as we migrated our customers from cable to fibre and transformed our business model to one that is sustainable in the long run.

While we experienced inevitable churn in our subscriber base, the migration was a necessary process for us to undertake. Upon completion of the migration, Pay TV customers are now able to fully benefit from higher broadband speeds, enhanced TV viewing experience, and enjoy the rich services that fibre enables. The infrastructure has been upgraded, but our commitment remains – delivering better experience, unique content and greater value for our customers.

In April 2019, in line with the Hello Change brand promise, we launched a revamped StarHub Entertainment experience with the debut of a simplified line-up of entertainment passes. Responding to evolving consumer trends, we are also offering no-contract options and free multi-screen viewing. From 50 “bundles” previously, we have organised our programming into seven “passes” and customers can choose to seamlessly switch between passes anytime, anywhere, with 24-hour notice. The refreshed plans have resulted in an improvement in Pay TV NPS over FY2019.

quote

Upon completion of
the migration, Pay TV
customers are now able
to fully benefit from
higher broadband speeds,
enhanced TV viewing
experience, and enjoy the
rich services that fibre
enables.

Our commitment to innovation is also shown in the quality and variety of our Pay TV content, which has been validated by various prestigious international awards such as the 2019 New York Festival Awards and the Promax Asia Awards. We are encouraged by our achievements and are inspired to do more.

The completion of the cable-to-fibre migration also enables us to move towards OTT offerings, such as the comprehensive Go Max package that provides an all-in-one access for customers to consume content wherever they want on the StarHub Go app. By nature of an OTT offering, non-StarHub customers can also enjoy 10,000 shows and over 80 channels available on the Go Max platform, giving us greater reach into a new customer segment as we continue to transform the delivery of our content and move towards OTT. We have since recorded a 23% YoY growth in our OTT subscriber base.

From the cost perspective, the cable-to-fibre migration would mean that we are moving from a fixed fee as part of the service level agreement for the cable infrastructure, towards a new per-connection variable cost structure. Similarly, we continue to engage our content partners, converting more fixed cost contracts to a variable model.

Overall, due to promotional activities relating to the cable-to-fibre migration, we experienced a decline in FY2019 ARPU to $44 from $50 in FY2018, while Pay TV revenue declined to $248.0 million from $311.3 million a year ago. However, we are seeing signs of stabilisation in the last quarter of the year, with ARPUs trending upwards to $42 in 4Q2019 compared to $40 in 3Q2019, and increased revenue to $56.5 million from $56.1 million across the comparative periods. 4Q2019 average monthly churn rate also dropped significantly to 0.7% compared to 2.2% in 3Q2019.

While we were navigating new price plans and the major migration exercise in FY2019, StarHub continued to actively curate new, exciting programming to expand the already rich variety available, such as the launch of RED BY HBO, a dedicated Asian movie channel; and a new lifestyle channel, Tech Storm HD, which offers a rich line-up of content in a never-seenbefore lifestyle tech genre.

We also continue to drive great value to subscribers – in September, StarHub Sports Pass and Sports Group subscribers were able to enjoy full coverage of the Rugby World Cup 2019 at no additional costs. The following month, we announced an agreement with the National Basketball Association to bring up to seven live games per week through NBA TV, the NBA’s 24/7 dedicated channel.

StarHub has always been known to offer exclusive experiences to deepen customer engagement, such as our week-long “It’s Show Time” celebration of our new entertainment passes in May 2019 that was chockful of activities ranging from up-close opportunities with celebrities like Nie Yuan and Jasper Liu, limited edition channel merchandise, and exclusive offers for new and existing customers. Our annual flagship awards event, the StarHub Night of Stars, was held in November and was graced by 18 renowned artistes across the region, appealing to fans from different generations.

The Pay TV business has undergone plenty of changes because of technological advancements, competition from OTT players and piracy, as well as a shift in consumption habits. We believe content will remain relevant in the foreseeable future as customers continue to consume content. What is changing, is the way content is being delivered to consumers.

We have been meeting the challenges with a constant refinement of our programming, coupled with improvements in the way we offer content to subscribers. As a company, we are focused and committed to turnaround the Pay TV business, as part of StarHub’s overall transformation. We maintain a long-term view of this business so as to ensure sustainable growth.

award image award image
Broadband

Our Broadband business, by its utility nature, is relatively stable. When the migration from cable to fibre took place, we had a small sliver of Broadband users still using cable. Due to promotional activities relating to the migration exercise, broadband ARPU dipped to $29 in FY2019 from $32 in FY2018, and the broadband segment recorded a lower revenue of $176.4 million in FY2019 compared to $185.8 million a year ago. Similar to the Pay TV business, we are seeing signs of stabilisation, ARPU held steady at $27 across 3Q2019 and 4Q2019. Meanwhile, we have seen an increase in subscriber base to 501,000 in FY2019 from 482,000 in FY2018.

Over the year, we released new offerings to target higher-value customer segments, such as the gamers who demand greater speeds and lower latency.

In August, ASUS Republic of Gamers (ROG) and StarHub jointly announced the exclusive launch of 802.11ac WiFi gaming router ROG Rapture GT-AC2900, which comes free with a two-year plan of the Turbo Gamer 2Gbps plan. The router features triple-level game acceleration, adaptive QoS, wtfast®, Dynamic Frequency Selection and MU-MIMO – to boost speeds and optimise internet routes between the home network and game servers for minimised ping times.

With this packaged offering, we are glad to report significant traction in adding more highervalue broadband subscribers as we strive to improve the performance for this traditionally stable segment with more targeted packages and offerings.