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Oxford Brookes University Bsc Hons In Applied Essay

Oxford Brookes University BSc (Hons) in Applied Accounting Research and Analysis Project

An Analysis of the Business and Financial Performance of StarHub Group from 2008 to 2010

Topic chosen and for the reason

For the basis of my Oxford Brookes University degree research and analysis project (RAP) is project, the topic selected was number 8, "The business and financial performance of organisation over the three years period." This selection is due in large part to my ultimate dream job of being a professional financial analyst and the environment in which the Singaporean telecommunications industry is developing. For instance, Chong and Chow emphasize that, "Asia's telecommunications market has long been viewed as lucrative and fast growing. The value of the Asian market is estimated at $180 billion, while a recent study shows that the "Asia-Pacific excluding Japan has been the fastest growing information and communications technology market, moving at a compound rate of over 14.5%. Given this rapid growth and potential, foreign investors (particularly major global communications operators) have shown strong interest in investing in the region's telecommunications infrastructure" (p. 1). In this regard, I am very interested in analyzing all sorts of data triggered me to look into the entire picture of company, and best way to analysis the business and financial performance of the company. Moreover, this topic links to ACCA syllabus very well. I can use my knowledge from paper F5 Performance Management and F9 Financial Management to establish the basic principles of performance measurement, paper F7 Financial Reporting to interpret the financial statements by calculating ratios, such as Profitability, Liquidity, Gearing, Investor and Efficiency Ratios.

1.2

Background of the company

1.2.1

The research company chosen. The organisation I have chosen is StarHub Ltd. My RAP is based on StarHub Group's performance for three financial years (i.e., 2008 to 2010). This company and its recent financial performance represent a highly appropriate topic for the RAP for several reasons. First, in today's dynamic telecommunications industry, telecom service providers (TSPs) face constant challenges. Think of telecommunications as the world's biggest machine. Strung together by complex networks, telephones, mobile phones and internet-linked PCs, the global system touches nearly all of us. It allows us to speak, share thoughts and do business with nearly anyone, regardless of where in the world they might be. Telecom operating Companies make all this happen. Second, while striving to speed next-generation products to market and meet consumer demand, companies of all types and sizes must also support existing services and deal with issues of convergence and consolidation. Both TSPs and independent software vendors continuously seek alternative operational models that will keep expenditures low and revenues strong.

To date, there have been substantial changes in telecommunication in Singapore. The telecommunication is no longer government monopoly, so there is very strong competition amount telecommunication industry and technical development also brought increase types of services that are offered, including telephone, mobile, pay -TV service, broadband, network, video conference and many more. At present, the Singapore telecom industry is fairly complex because of its unique characteristics compared to other similarly situated enterprises. There are three companies currently providing telecommunication services in Singapore as follows.

1. Singapore telecommunication Ltd.

2. StarHub Ltd.

3. M1 Ltd.

In this research project, the company, StarHub Ltd., was selected for the target research company.

1.2.2

The background of the company. In 1999, the regulator of telecommunications in Singapore, the Telecommunications Authority of Singapore, issued StarHub (hereinafter alternatively "the company" or "the Group"), a consortium of British Telecom, NTT, and local Singapore partners, a license to provide cellular services, including voice telephony, international direct dialing, leased circuits, public switched message and data services and other data services (Rao & Klopfenstein 2002). These trends are reflective of the fact that In Singapore, ownership of facilities-based services by foreign interests is restricted to a less than majority ownership (i.e., 49%) and even though monopolies over fixed-line services remain in place, Singapore has permitted at least some degree of competition for data and leased lines and full competition for mobile cellular, paging, and cable televisions services (Chong & Chow 1999).

The company's main competitor, Singapore Telecom (SingTel), is the monopoly provider of basic local and international telephone services, but as noted above, StarHub received its license in 1999 and began operations a year later (Chong & Chow 1999). Since that time, StarHub has completed an interconnection agreement with SingTel (i.e., the Interconnect Agreement Signed by SingTel and StarHub) to provide the basis for a more competitive telephony service in Singapore today (Chong & Chow 1999). These actions were even more significant from a regional perspective because Singapore was among the first Asian countries...

Consequently, the telecom investment climate in Singapore is widely regarded as a stable environment for investment (Chong & Chow 1999, p. 1).
Today, StarHub is Singapore's fully-integrated info-communication company, offering a full range of information, communications and entertainment services for both consumer and corporate markets. StarHub operates Singapore's fastest two-way HSPA+ mobile network that delivers up to 21 Mbps for downlink to complement its nation-wide GSM network, and an island-wide HFC network that delivers multi-channel cable TV services (including High Definition Television and on-demand services) as well as ultra-high speed residential broadband services. StarHub also operates an extensive fixed business network that provides a wide range of data, voice and wholesale services. Over Singapore's fibre-based Next Generation Nationwide Broadband Network, StarHub offers a broad range of home and business broadband plans along with a host of advanced media-rich value-added services.

Launched in 2000, StarHub has become one of Singapore's most innovative info-communications providers, and the pioneer in 'hubbing' - the ability to deliver unique integrated and converged services to all its customers. StarHub, listed on the main board of the Singapore Exchange since October 2004, is a component stock of the Straits Times Index and the MSCI Singapore Free Index. Since its inception just 11 years ago, StarHub has become one of Singapore's most innovative info-communications providers, and the pioneer in 'hubbing' - the ability to deliver unique integrated and converged services to all its customers (Annual report, 2010).

1.3

The aims and objectives of the report

1.3.1

The aims of the report. The aim of this project was to appraise the business and financial performance of StarHub Ltd. For the years 2008 to 2010. In this research and analysis report, only the Group company of Starthub will be analysed and discussed. Therefore, Group information includes the company's subsidiaries as well.

1.3.2

The objective of the report. The research questions analysis and discussed in research project are:

1. What was StarHub overall financial performance from 2008 to 2010 and how did fare against competitor?

2. What is current strategic position of StarHub?

3. What are the critical success factors for StarHub achieving growth?

4. Forecast of operational & financial performances for 2011

According to ACCA textbooks, there are many different ways to measure financial performance. Based on the foregoing objectives, it was determined that the use of the ratios and the trends of ratios primary tools in the analysis were most appropriate. To this end, financial ratios were calculated from one or more pieces of information from a company's financial statements. In isolation, a financial ratio is a useless piece of information. In context, however, a financial ratio can provide a financial analyst with a robust picture of a company's situation and the trends that are emerging.

The classification of ratios into different categories depends on objectives of financial analysis, which group ratios into four broad categories: (a) profitability, (b) liquidity and efficiency, (c) finance and (d) investment ratios. A ratio gains utility by comparison to other data and standards. By calculating the major ratios for all the four categories, the financial statements could be analysed and interpreted through these ratio results.

In terms of business analysis, the study examined the competitive positioning and short- to medium-term business strategies of key industry players. Corporate strategy was examined within the context of telecommunication industry forecasts, in macroeconomic views and analysis the wider competitive landscape to generate company Porter's five force (The threat of new entrant, The bargaining power of suppliers, The bargaining power of buyers, The threat of substitutes and The competitive rivalry that exists amongst existing organisations in the industry) analysis.

Comparable financial information is useful as a management tool for organizations of all types, regardless of their ownership, because comparable information allows organizations to discover operational areas in need of improvement. In this research, ratio analysis was completed for Singapore telecommunication Ltd. And M1 Ltd. As competitor and compared with the performance delivered by StarHub Ltd.

In summary, the objective of this project is to measure business and financial performance of StarHub for the years 2008 to 2010. It also provide more useful information by means of analysing the Profitability, Liquidity and Efficiency, Gearing and Investment ratios and comparing them with different periods and with the competitor also Porter's Five Force analysis for macro environment in this industry.

2.

INFORMATION-GATHERING AND ACCOUNTING AND Business TECHNIQUES

2.1

Information gathering

2.1.1

Sources Used and Reasons for their use. Information gathering is the essential step…

Sources used in this document:
REFERENCES

Anderson, M. (2010, August) 'Gearing.' ACCA Student Accountant.

Bragg, S.M. (2007) Business Ratio and Formulas, 2nd Ed. John Wiley & Sons, Inc.

Chong, R. & Chow W. (1999) 'Financing Telecommunications Projects in Asia: A Promising

Regulatory Perspective.' Federal Communications Law Journal, vol. 52, no. 1, p. 1.
Lever, R. (2008), Weakness of Porter's Five Forces Model (Online), Retrieved from http://roger-
M1 (2009), M1 Ltd., Annual report 2010(Online), Retrieved from http://info.singtel.com/about-
M1 (2010), M1 Ltd., Annual report 2010(Online), Retrieved from http://info.singtel.com/about-
News release (2011, February) [online] available: http://www.corporateir.net/Media_Files/
http://phx.corporate-ir.net/phoenix.zhtml?c=183543&p=irol-reportsannual (accessed 8
http://phx.corporate-ir.net/phoenix.zhtml?c=183543&p=irol-reportsannual (accessed 8
http://phx.corporate-ir.net/phoenix.zhtml?c=183543&p=irol-reportsannual (accessed 8
Singtel (2009) Singtel, Ltd., Annual report 2010 (Online), Retrieved from http://info.singtel.com/about-us/investor-relations/annual-reports" target="_blank" REL="NOFOLLOW" style="text-decoration: underline !important;">http://info.singtel.com/about-us/investor-relations/annual-reports (accessed 20 Aug 2011)
Singtel (2010) Singtel, Ltd., Annual report 2010 (Online), Retrieved from http://info.singtel.com/about-us/investor-relations/annual-reports" target="_blank" REL="NOFOLLOW" style="text-decoration: underline !important;">http://info.singtel.com/about-us/investor-relations/annual-reports (access 20 Aug 2011)
Project tools (2009) Risk analysis vs. SWOT (Online), project tools. Retrieved from http://www.projecttools.org, (accessed 13 Aug 2011)
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