Hubbing at Your Service STARHUB LTD Annual Report 2016 Hi, WE ARE Hubbers :) HERE 24/7! How can I help you? Hubbing Corporate Profile at Your Service StarHub is Singapore’s fully-integrated In an increasingly competitive landscape, info-communications StarHub remains committed to investing company, ofering in service innovation and excellence. a full range By enhancing customer service initiatives of information, across multiple touch points, including communications digital, homes, ofces and in-store, we and entertainment continue to strengthen our value proposition services for both through a seamless customer experience. consumer and corporate markets. Our ability to excel in service is a competitive advantage for our business and diferentiates Vision our brand. It helps us attract and retain customers from all market segments and also To be Singapore’s serves to engage and motivate our people. first choice From our customers, our employees, our for information, business partners to our investors, StarHub communications remains dedicated to serving your needs. and entertainment services. Mission To provide every person, home and business in Singapore with world-class multimedia services and content. Core Values ExCITe: Excellence, Creativity, Integrity, Teamwork. View our Report Online 2016 Annual Report Go green and help reduce carbon footprints. Download via our StarHub Annual Report app. Or visit www.starhub.com/ir StarHub Ltd Annual Report 2016 1 What’s Inside As an integrated Overview Overview info-communications company, we can create Key Figures 02 value when we integrate The Group Today 03 our relationships with 5-Year Financial Highlights 04 all stakeholders. For more details, go to Strategy page 20 Strategy Chairman’s Message 14 Enhancing the Customer Experience 18 Value Creation 20 Board of Directors 22 In Discussion with StarHub’s Management 28 Performance Senior Management’s Profile 36 Governance Mobility Entertainment & SmartLife Enterprise Fixed Singapore’s mobile penetration Technology has brought Serving the enterprise rate remains high and the opportunities for StarHub customer involves investments in popularity of smart devices to deliver more seamless infrastructure, building trust and a Sustainability continues to drive mobile data experiences to our customers. focus on the customer’s business. usage upwards. For more details, go to For more details, go to For more details, go to page 44 page 50 page 40 Financials Performance Financials Others Hubbing in Review Financial Statements 2016 129 Interested Person – Mobility 40 Directors’ Statement 130 Transactions 203 – Entertainment & SmartLife 44 Independent Auditors’ Report 140 Shareholding Information 204 – Enterprise Fixed 50 Statements of Notice of Annual Financial Position 147 General Meeting 206 Income Statement 148 Corporate Information 210 Governance Statement of Proxy Form Corporate Governance 54 Comprehensive Income 149 Directors’ Particulars 77 Statements of Changes in Equity 150 Awards and Industry Honours 79 Consolidated Cash Flow Investor Relations 80 Statement 154 Risk Management 82 Notes to the Sustainability Financial Statements 155 Sustainability Report 86 Group Financial Review 124 2 Hubbing at Your Service Key Figures Dividend Cumulative Total Market Capitalisation FY2016 Shareholders’ Return 2016 Since FY2005 +122% +108% 20¢ 394% $4.9b An increase from An increase from FY2005 of 9c 2004 of $2.3b StarHub Share Price Performance Against STI Index From 2006 – 2016 STI StarHub (Points) ($) STI STI 2,986 2,881 4,000 5 4 3,000 3 2,000 2 1,000 StarHub StarHub 2.63 2.81 1 0 0 Dec 2006 Dec 2016 StarHub Ltd Annual Report 2016 3 The Group Today The Group’s total revenue of $2.40 billion was 1.9% lower Mobile Overview YoY, attributed to lower revenues from sales of equipment and services. Service revenue was 0.3% lower YoY. Broadband -2.0% YoY 2016 revenue recorded the highest revenue growth YoY at 8.2%. tiered plan $1.21b mix From 2013’s $1.24b CAGR: Tiered 68% Mobile Pay TV Broadband -0.8% Non-tiered 32% 51% 16% 9% Total Pay TV Revenue Enterprise Sales of Fixed Equipment -3.4% YoY 2016 channel 17% 8% $378m mix * % may not add up due to rounding. From 2013’s $386m CAGR: HD 57% -0.7% SD 43% Broadband +8.2% YoY 2016 high speed $217m plan mix From 2013’s $242m CAGR: > 100Mbps 93% -3.6% < 100Mbps 7% Enterprise Fixed +3.9% YoY 2016 revenue $400m mix From 2013’s $368m CAGR: Data & Internet 87% 2.8% Voice 13% 4 Hubbing at Your Service 5-Year Financial Highlights Revenue Earnings EBITDA Margin Per Share (EPS) on Service Revenue -1.9% YoY -8.2% YoY -1.0% pts YoY $2,397m 19.7¢ 31% Total revenue was $47.6 million or Diluted EPS is calculated by dividing EBITDA amounted to $690.1 million or 1.9% lower YoY, attributed to lower the Group’s profit attributable to 31.2% of service revenue for FY2016. revenues from sales of equipment equity holders by the weighted and services. average number of ordinary shares*. $m cents % 2012 2,434 2012 21.4 2012 33 2013 2,370 2013 22.0 2013 33 2014 2,387 2014 21.4 2014 34 2015 2,444 2015 21.4 2015 32 2016 2,397 2016 19.7 2016 31 * Excluding treasury shares. Hubbing Households Single Service Household Double Service Household Triple Service Household +3.2% YoY -3.2% YoY -4.1% YoY +10,000 -7,000 -10,000 ‘000 ‘000 ‘000 2012 337 2012 232 2012 214 2013 327 2013 219 2013 227 2014 313 2014 219 2014 242 2015 312 2015 217 2015 245 2016 322 2016 210 2016 235 StarHub Ltd Annual Report 2016 5 Overview Revenue $m 1,234 1,243 1,248 1,240 1,215 Mobile 2.31m Customers 2012 2013 2014 2015 2016 Revenue $m 396 386 390 391 378 Pay TV 498k Households 2012 2013 2014 2015 2016 Revenue $m 251 242 202 200 217 Broadband 473k Customers 2012 2013 2014 2015 2016 Revenue $m Enterprise $400m 358 368 378 385 400 Fixed Revenue 2012 2013 2014 2015 2016 6 Hubbing at Your Service StarHub Ltd Annual Report 2016 7 We have a system that does both sales and service. Now sales interactions can be executed anywhere on the shop floor using tablet apps. Chai Juan Wei Senior Consultant From INSPIRING To INVOLVING We have empowered our retail staf to provide personalised oferings to our customers. With tools that combine service delivery and sales into one seamless system, when any customer walks into a store, we can understand their needs better and faster. Moving closer to our customers through tablet devices helps our people interact directly and increases productivity at the same time. AT YOUR SERVICE. Over 270hrs Over of Training Our retail staf are equipped with more than product knowledge, they are 35 also trained to ensure end-to-end seamless Retail Outlets fulfillment capabilities. 8 Hubbing at Your Service StarHub Ltd Annual Report 2016 9 We have an e-Butler tool that fetches relevant information from various sources to enable us to resolve customers’ concerns promptly during the call. Jen Hong Process and Communications Executive From INVOLVING To ENGAGING Engaging our customers means understanding both their individual needs and their needs as a household. This enables us to ofer rewards to other members in their family. While we continue to enhance our hotline services, we are also working towards every StarHub employee being involved and being responsive in engaging our customers. AT YOUR CONVENIENCE. Over Call Centre handles over 520 Customer Service Staf Our call centres are equipped with more 11,000 than just technical knowledge, they have calls everyday specialised tools to address customers’ concerns promptly. 10 Hubbing at Your Service StarHub Ltd Annual Report 2016 11 We aim to evolve along with our customers’ lifestyle needs and ofer relevant services. Elias Khan Senior Analyst From ENGAGING To SECURING Today, our stores have a Hub Trooper consultation corner and you can find our Hub Troopers in homes all over the nation. This enables us to understand some of the issues our customers face when, for instance, moving from their previous home to their new fibre-connected home. We are able to anticipate these kinds of issues and secure the trust and loyalty of our customers. DELIGHTING YOU. Over Seamless Engagements Our Hub Troopers are equipped with tablets 225 which remove manual work orders for fulfillment. Post visits, Hub Troopers work orders are closed in real-time so that on the move staf at other touch points have visibility. 12 Hubbing at Your Service StarHub Ltd Annual Report 2016 13 We are committed to leveraging our scale to derive greater synergies and serve our customers better. From Nicolas Bureau eCommerce & Online Lead SECURING To DELIGHTING The StarHub Business Partners community is an extended sales force to provide better reach to our customers, including the micro businesses in the heartlands. With more than 140 business partners, we are able to leverage on the wide network to listen to customers’ feedback and serve them better. AN EYE FOR DETAIL. Improved Over Net Promoter Score Combining our partners’ diversified skills and our wide 140 range of oferings, we provide a complete set of Business Partners info-communications technology solutions. 14 Hubbing at Your Service Chairman’s Message We are undergoing our own digital transformation which will enable us to ofer a wider range of services with improved economics, and engage with customers in ways that are more meaningful to them. Steven Terrell Clontz Chairman Service Revenue Mix Mobile 55% Pay TV 17% FY2016 Broadband 10% Enterprise Fixed 18% StarHub Ltd Annual Report 2016 15 We will stay focused on delivering reliable services, ensuring competitive levels of network performance, and ofering good value. Dear Shareholders, Sustainability Reporting Operating Revenue StarHub celebrated its 16th anniversary Under proposed changes to SGX listing in 2016.