Hello(: I thought it would be interesting to read this article about the merger between StarHub and SCV and think about the reasons behind their decision.
Here's part of the article and below the article are the benefits of the merger that I evaluated (with the help of another article http://www.ida.gov.sg/doc/Policies%20and%20Regulation/Policies_and_Regulation_Level2/proposed_consolidation_starhub_SGcable/Joel.pdf
By Irene Tham
Wednesday, May 02, 2001 05:28 PM
The merger will give StarHub a residential network for carrying video, voice and data services. The telco currently offers fixed-line data and voice services to corporations and runs a mobile phone network. "The synergies are obvious. SCV has a nationwide broadband network that reaches all homes in
To date, SCV has more than 265,000 cable TV customers and 50,000 broadband subscribers, while StarHub has captured 10 percent of the
Heightened competition
Analysts believe that the merger will increase competition for Singapore Telecommunications Ltd, the island's dominant telco.
"StarHub will have a full infrastructure to compete more effectively with SingTel," said an analyst with a foreign brokerage firm.
The merger will also allow StarHub to offer telephone services to the residential market, a plan delayed by IDA's sudden decision to liberalize the telco industry two years in advance.
Before the merger, both companies operate on two different markets. With the merger between StarHub and SCV, StarHub's fixed-line, wireless, long distance and Internet service business units will be combined with SCV's cable TV and residential broadband Internet access businesses.
Benefits of the merger
There are many benefits of merging StarHub and SCV, one of which is to reduce potential competition between StarHub and SCV in terms of broadband services.
This is due to the possibility of the markets of the two companies intersecting in the future due to the fixed telephone line. Without the merger, StarHub might want to introduce new services such as the xDSL(Digital Service Line-a family of technologies that provides digital data transmission over the wires of a local telephone network) to its residential subscribers to convince its existing users to switch over to broadband (increase revenue) and to alleviate the amount of subscribers switching to other Internet Service Providers (company that offers its customers access to the internet) The xDSL service will likely be more popular among consumers as it uses high frequency, while regular telephone, that of SCV uses low frequency. Hence with the merger, there would be a reluctance to introduce xDSL services to residential subscribers as it will be easier to capitalize on one service rather than to focus on a new service.
By merging, the new company will create a stronger competitor to other telecommunication and internet service providers in
Connie (: