Ahead with Hubbing Annual Report 2012 Hubbing Delivers In two short years, after the commercial launch of StarHub in 2000, we became Singapore’s fi rst fully integrated info-communications and entertainment company. We have continuously created compelling reasons for customers to use Hubbing, a ‘quadruple power play’ of service offerings combining mobile, pay TV, broadband and fi xed network services. In the process, we have consistently delivered value and returns to our stakeholders. History of Winning Sustainable Content Results from 2005 to 2012 1 Key Figures Revenue Total Mobile Customers 2 The Group Today FROM $1.57b TO $2.42b FROM 1.39m TO 2.20m 4 Our Financial Highlights 6 Chairman’s Message 10 Hubbing Enhances Success 1.5x 1.6x 12 Hubbing Powers Business 14 Hubbing Raises Performance 16 Hubbing Heightens Recognition Profi t Attributable to Shareholders Pay TV Households FROM $221m TO $359m FROM 448,000 TO 536,000 18 Board of Directors 24 In Discussion with StarHub’s Management 32 Senior Management 1.6x 1.2x 34 The Nucleus Connect Conversation 36 Hubbing in Review Free Cash Flow Broadband Households 50 Group Financial Review FROM $257m TO $417m FROM 277,000 TO 444,000 55 Corporate Governance 72 Directors’ Particulars 75 Awards and Industry Honours 1.6x 1.6x 76 Investor Relations 80 Sustainability Report 125 Financial Statements Triple-Service Household Hubbing Index from 2005 to 2012 www.starhub.com/ir Visit us online to learn more about StarHub and download the annual report. Download a QR code reader app on your FROM 107,000 TO 214,000 smartphone and scan this A triple-service household subscribes to all three services code for more 2x - Mobile, TV and Home Broadband information. | KEY FIGURES | Continue to Deliver Strong Shareholders’ Value 20.0¢ $6.5b DIVIDEND MARKET INCLUDES A PROPOSED FINAL CAPITALISATION DIVIDEND OF 5 CENTS +411% CUMULATIVE TOTAL SHAREHOLDERS' RETURN +122% SINCE FY2005 +179% FROM 9 CENTS FROM $2.3B IN FY2005 IN FY2004 | STARHUB SHARE PRICE PERFORMANCE VS STI INDEX (FROM 2005 TO 2012) | StarHub STI $3.79 StarHub (Points) Dec 2012 ($) 4,000 4.00 2,066 3,000 Dec 2004 3.00 STI 2,000 3,167 2.00 Dec 2012 1,000 1.00 $1.10$1.10 Dec$1.10 2004 Dec 2004 0 Dec 2004 0 Annual Report 2012 / STARHUB LTD / 1 | GROUP AT A GLANCE | SALE OF The Group Today EQUIPMENT 8% The Group’s operating revenue increased 4.7% year-on-year (YoY) BROADBAND to $2.42 billion due to higher service revenue and sales of equipment. $2.42b 10% Fixed Network Services recorded the highest revenue increase YoY at 6.2%, TOTAL REVENUE followed by Pay TV revenue which grew 5.4% YoY. Broadband revenue FIXED Revenue NETWORK 15%% 51% MOBILE was 3.2% higher and Mobile revenue recorded a gain of 0.5%. SERVICES Mix +4.7% 1616%6% PAY TV Mobile Pay TV Broadband Fixed Network $1.22b $396m $249m $358m INCREASED 12% DECREASED 2% INCREASED 4% INCREASED 13% FROM 2009's $1.09B FROM 2009's $405M FROM 2009's $241M FROM 2009's $318M Pre-paid Voice 20% 84% Standard-Defi nition 18% 80% Post-paid Others 50%% 50% StarHub 82% Data & Internet High-Defi nition 16% 2012 2012 2012 2012 REVENUE MIX CHANNEL MIX > 50 MBPS MARKET MIX* REVENUE MIX * Estimated $835m $917m $968m $981m $405m $395m $376m $396m BROADBAND $241m $236m $242m $249m DATA & $269m $278m $281m $295m POST-PAID PAY TV INTERNET REVENUE REVENUE REVENUE 2009201020112012 2009 2010 2011 2012 2009201020112012REVENUE 2009 2010 2011 2012 3-YEAR 3-YEAR 3-YEAR 3-YEAR CAGR 5.5% CAGR (0.8%) CAGR 1.2% CAGR 3.1% 2 / STARHUB LTD / Annual Report 2012 Annual Report 2012 / STARHUB LTD / 3 | OUR FINANCIAL HIGHLIGHTS | 5-Year Financial Highlights 2012 2,422 2012 214 2011 2,312 232 337 2010 2,238 2011 205 2009 2,150 244 2008 2,128 342 2010 200 REVENUE ($ MILLION) 240 350 2009 186 241 2012 417 357 2011 450 2008 168 2010 398 243 364 2009 461 Triple Service Households 2008 378 Double Service Households Single Service Households FREE CASH FLOW ($ MILLION) HUBBING HOUSEHOLDS ('000) 2012 32 2011 31 2010 28 2009 32 2008 32 EBITDA MARGIN ON SERVICE REVENUE (%) 4 / STARHUB LTD / Annual Report 2012 Mobile Broadband 2,200,000 444,000 CUSTOMERS HOUSEHOLDS 2012 1,224 2012 249 2011 1,218 2011 242 2010 1,181 2010 236 2009 1,094 2009 241 2008 1,079 2008 253 REVENUE ($ MILLION) REVENUE ($ MILLION) Pay TV Fixed Network 536,000 $358m HOUSEHOLDS 2012 396 2012 358 2011 376 2011 337 2010 395 2010 332 2009 405 2009 318 2008 398 2008 300 REVENUE ($ MILLION) REVENUE ($ MILLION) Annual Report 2012 / STARHUB LTD / 5 | CHAIRMAN'S MESSAGE | “Delivering a good performance does not mean that we will rest on our laurels. In fact, it is increasingly important for us to adapt and evolve our services to meet new challenges.” $2.4b WE RECORDED AN EIGHTH STRAIGHT YEAR OF CONSISTENT GROWTH “OUR SHARE PRICE WAS UP 30% OVER +30% THE YEAR, PLACING IT AMONG THE GAIN 10 BEST PERFORMERS ON THE STI.” DEAR SHAREHOLDERS climbing, traditional telecoms services such as voice The past year has been another challenging but rewarding calls and SMS have shown a dip in volume - a sign of how year for StarHub. In the face of a weak global economy, communication platforms are changing. Singapore’s gross domestic product registered a 1.3% growth in 2012, down from 5.2% in 2011. Nonetheless, The Next Generation Nationwide Broadband Network we have put in a strong performance across all our lines (Next Gen NBN) continues to expand in Singapore, of business. covering 95% of households and commercial buildings. As a result, the traditional telecommunications providers We are proud to have recorded an eighth straight year of are now facing new broadband and multimedia competitors consistent growth in 2012, with our operating revenue which will exert constant price pressures on service plans. rising 5% to $2.4 billion, and all our four lines of business showing improvement. EBITDA was up 7% over 2011 While traditional pay TV services have shown some to $720 million, mainly due to higher service revenue, growth in the local industry, the challenge from over- higher sales of equipment and a tight rein on staff costs. the-top content players continues to exist, attracting more We are also pleased that StarHub has delivered sterling viewers to access these alternative channels for their shareholder returns once more. Our share price was up own entertainment needs. This will become increasingly 30% over the year, placing it among the 10 best performers prevalent as more devices allow for Internet access. on the Straits Times Index (STI). With its dividend yield of 5%, StarHub has one of the highest dividend yields In light of these developments, StarHub will focus on some amongst the STI component stocks. key strategic initiatives that will allow us to meet the challenges of the new digital economy. Delivering a good performance does not mean that we will rest on our laurels. In fact, it is increasingly CONTINUING OUR FOCUS ON CUSTOMER SERVICE important for us to adapt and evolve our services to meet StarHub will ensure that our customer service remains new challenges. The market is becoming increasingly one of the cornerstones of the StarHub brand. In the service fragmented, with new technologies being introduced and industry, especially where there are multiple competitors, alternate means of communication being adopted regularly. it is important to deliver a premium customer experience. StarHub needs to be fl exible in our service delivery and in We are pleased to note that our customer service division our creativity and innovation investment, so that we can has the best customer satisfaction rating for broadband keep abreast of new developments. services in 2012, with our mobile services locking in a strong second position, according to the 2012 Customer Singapore’s mobile phone penetration rate continues Service Index of Singapore. to hover around 151% with the take-up rate for smartphones and tablets maintaining strong growth Part of this recognition is due to the efforts taken in trajectories. While mobile data traffi c has been steadily improving our various customer service touch points. Annual Report 2012 / STARHUB LTD / 7 | CHAIRMAN'S MESSAGE | For instance, we have developed a self-help mobile Vodafone partnership bore fruit as application called ‘My StarHub’ that houses the most the StarHub-Vodafone marketing frequently-asked questions. ‘My Community’ is a crowd- drive spread across the world. Our sourced web portal where customers can interact with NFC initiative with DBS, MasterCard each other on issues regarding our services. And we have We and EZ-Link saw the launch of our further enhanced our comprehensive interactive voice continued to SmartWallet service, and our close response platform, along with our highly-interactive strengthen partnership with Microsoft allowed Twitter account ‘StarHub Cares’. As a result, monthly our us to become their launch partner service call volume in 2012 has dropped by 20%, without partnership for Windows 8. Moving forward, compromising on the quality of customer service. with many we expect to leverage further our relationship with our regional INVESTING IN NEW TECHNOLOGIES leading telecom friends, and even many non- AND CONTENT CREATION companies traditional service providers. Our mobile network has been enhanced to support the from around increasing demands for mobile broadband access. the world.” BUILDING A BETTER BRAND Besides upgrading our current 3G network, we have Supported by our long-time started migrating our mobile network to Long-Term creative agency DDB Group Evolution (LTE) to ensure that our mobile network capacity Singapore, StarHub won the ‘Brand continues to support the mobile broadband boom that of the Year’ Award at the Singapore will occur as more LTE handsets are introduced.