TRAN5FORMATION FOR A NEW GENERATION ANNUAL REPORT 2020 TRAN5FORMATION FOR A NEW GENERATION The world is changing as global economies evolve at an accelerated pace. In today’s dynamic digital economy, being fast is not enough — we need to be smarter. At StarHub, we are constantly refining our edge and innovating new ways to elevate the digital lifestyles of a new generation. That is why we are committed to powering the future of telecommunications as the first service provider in Singapore to launch our 5G non-standalone network. Now, more than ever, connectivity and communication will empower the way we live, work and play. We are paving the way forward today by staying future-ready. STRATEGY Transformation Roadmap 10 Chairman’s Message 12 StarHub At a Glance 18 In Discussion with Senior Executives 20 Significant Events 29 Value Creation 30 Awards and Industry Honours 32 BUSINESS REVIEW Consumer 34 Enterprise 40 Group Financial Review 46 GOVERNANCE Board of Directors 54 Directors’ Particulars 60 Senior Executives 62 Corporate Governance 68 Corporate Infomation 99 Risk Management 100 Investor Relations 106 SUSTAINABILITY Sustainability Report 108 FINANCIALS FY2020 Financial Statements 175 Directors’ Statement 176 Independent Auditors’ Report 184 Statements of Financial Position 190 Consolidated Income Statement 191 Consolidated Statement of Comprehensive Income 192 Statements of Changes in Equity 193 Consolidated Cash Flow Statement 199 Notes to the Financial Statements 200 ADDITIONAL INFORMATION Interested Person Transactions and Material Contracts 280 Shareholding Information 282 Notice of Annual General Meeting 284 Additional Information on Directors Seeking Re-election 290 Proxy Form Annual Report 2020 1 SPARKING GREATER TRANSFORMATION Reigniting the challenger spirit, optimising efficiencies and accelerating value creation. D.A.R.E. Transformation 82% Executed Maintained position as Singapore’s fastest telco (IMDA IMconnected Report, H1 2020) REDEFINING EVERYDAY EXPERIENCES An unparalleled customer experience through digitalisation, innovation and personalisation. Zero-touch products & customer journey Launched StarHub TV+, a big leap forward for Pay TV content delivery transformation Quicker time-to-market & agility to compete in a dynamic market PURSUING CONTINUOUS GROWTH Our relentless pursuit for growth through new and emerging opportunities, deepening our reach and achieving greater diversification. Acquired Strateq, bolstering Enterprise capabilities and furthering regional diversification ambitions Sustained strong Cybersecurity growth of +51.4% YoY EMPOWERING THE FUTURE The future is 5G. We will ride on our pre-eminent position to enable new innovations and capture emerging opportunities, empowering consumers and businesses alike. First in Singapore; Widest nationwide 5G NSA coverage; Integrated experience Efficient deployment: Singapore’s first shared active radio network Establish 5G edge through strategic partnerships and active Enterprise trials EMPOWERING THE FUTURE D.A.R.E. TRANSFORMATION 82% EXECUTED As at FY2020, unless otherwise stated. FY2019-2021 Expected Savings & Reinvestment 36% 100% Reinvestment 83% 25% 23% -17% >$210M 39% 20% Workforce Operational TV Operations Total Digitalisation & Expected Optimisation Efficiencies & Content Savings Transformation Savings Initiatives Planned Executed DELIVERING ACCELERATING REALISING ENHANCING Market-Leading Value Creation From Growth From Efforts To Customer Experiences Core Businesses New Opportunities Transform Digitally • First to launch 5G NSA • Ongoing digitalisation and • 51.4% YoY Cybersecurity • Approximately 5 times in Singapore with widest simplification of processes revenue growth in FY2020 YoY growth in giga! nationwide coverage1 to drive operational subscriber base; • $33.2M revenue efficiencies Maintained highest NPS contribution from Strateq • Strong traction for in market experiential 5G Mobile+ • 11.8% incremental YoY following completion of and Biz+ plans reduction in Opex acquisition in July 2020 • Commenced IT Transformation in • Pursue strategic • Sustained momentum • More than $210M savings 3Q2020, which will partnerships to empower for transparent 4G Hello identified; 82% executed form the backbone new 5G experiences for Change plans (majority of to StarHub’s digital postpaid subscriber base) • Made further inroads to consumers convert Pay TV content strategy • StarHub TV+ marks providers to a variable cost • Active trials with enterprise significant leap forward model customers, industry and for Pay TV content tech partners to develop • Greater procurement delivery transformation 5G use cases savings from renegotiation • Continue to seek growth • 24.5% YoY incremental of expiring contracts opportunities through improvement in NPS • Established strategic synergistic M&A for • Matured chatbot as partnerships with global greater diversification an online touchpoint partners to augment and to bolster Enterprise to automate customer Enterprise network capabilities support with over 80% offerings accuracy 1 As at September 2020. 10 STARHUB LTD IT & DIGITAL TRANSFORMATION STRATEGY IT TRANSFORMATION ENABLING DIGITAL TRANSFORMATION Commenced in 3Q2020 Simple Digital-First Products Flexible and Modular REVIEW BUSINESS IT Architecture Leading Digital Customer Experiences Cloud Scaling Lean and Automated Processes Data and AI-Driven Monetisation Low / No Code Agile Operating and Delivery Model GOVERNANCE KEY OBJECTIVES 2 3 4 Personalised, Predictive Extract Value From Faster Time-To-Market; Simplify Processes & 1 Customer Experience; Rich Data Assets; Scalability & Flexibility Operations; Improve Zero-Touch Products & Product-Driven Design Cost Efficiency Customer Journey FY2020 ACHIEVEMENTS POTENTIAL COST SAVINGS SUSTAINABILITY Leading Digital Customer Experiences Opportunities Identified • Lower commission cost with increased DIGITAL SALES migration to online touchpoints • Lower operating leases with a more effective +32% >60% retail footprint Digital Sales Conversion Rate • Lower staff costs from simplified and 2 Improvement recorded Transaction streamlined processes, rightsourcing and YoY Growth after consumer digital sales journey simplication embracing digitalisation • Lower repairs & maintenance expenses and DIGITAL SERVICE licence fees FINANCIALS • Sustainable mid-to-long term IT support cost >12% >3M savings Monthly Service Transactions • Further cost savings to be identified with 2 (App & Web service Active Users ongoing process and organisation reviews YoY Growth platforms) 2 As at 31 December 2020. Annual Report 2020 11 CHAIRMAN’S MESSAGE WE EMBRACED THE STARHUB “CHALLENGER SPIRIT AND PRESSED ON WITH THE RELENTLESS“ EXECUTION OF OUR D.A.R.E. STRATEGY. Steven Terrell Clontz Chairman 12 STARHUB LTD STRATEGY DEAR SHAREHOLDERS, FY2020 was a year like no other. We embraced 50-50 joint venture company to secure one of the StarHub challenger spirit and pressed on Singapore’s 5G licences and spectrum rights. REVIEW BUSINESS with the relentless execution of our D.A.R.E. Subsequently, StarHub was the first to bring strategy, despite the extraordinary events and 5G non-standalone services to Singapore unprecedented COVID-19 related challenges with the widest nationwide coverage1. Our that unfolded over the past 12 months, integrated, experiential 5G Mobile+ plans remaining focused on our core values and continue to gain traction with consumers objectives. seeking greater speed and lower latency, exceeding internal targets. We achieved significant corporate milestones to strengthen our competitive edge. We bolstered The introduction of StarHub TV+ marked our service and product offering and diversified a significant leap forward for our Pay our geographical presence with the acquisition TV content transformation, combining of Strateq. We made good progress on our IT traditional linear TV and over-the-top (“OTT”) and Pay TV transformation initiatives to better services onto a single hybrid platform, GOVERNANCE serve the needs of our customers across providing customers with a breadth of our digital platforms. We also intensified our entertainment options. Our efforts continue support extended to customers, stakeholders to gain positive traction in the market, and and the community during this period, enabling we will look to bring on more OTT partners us to surmount the challenging period together. to our platform in 2021. UNRELENTING COMMITMENT TO Our heightened focus on Accelerating value TRANSFORMATION creation from core businesses through digitalisation and simplification of processes In FY2019, we launched our D.A.R.E. elevated operational efficiencies across the Transformation programme, identifying over Group, reaped greater procurement savings, $210 million in cost optimisation initiatives and made further inroads to convert our Pay SUSTAINABILITY over a three-year period. Capital unlocked TV content providers from a fixed-fee model through strategic initiatives was redeployed to a variable per-user fee model, affording into digitalisation strategies and growth greater flexibility and scalability. opportunities to ensure StarHub’s future competitiveness and relevance. Realising growth from new opportunities continues to be an area of focus. In July As at 31 December 2020, we have executed 2020, we completed the acquisition of 82% of this cost optimisation programme. Strateq, a leading data-driven IT solutions We continue to identify other areas of growth provider, strengthening our portfolio to opportunities and cost efficiencies, and