StarHub reports 1Q19 net profit fell 14 percent on lower mobile and pay TV revenue

StarHub retail outletStarHub retail outlet. Photo taken pre-Covid

StarHub reported Friday its first quarter net profit attributable to shareholders fell 14.2 percent on-year to S$54 million on lower revenue from mobile and pay TV despite overall revenue growth. The telco lowered its dividend payment.

Revenue for the quarter ended 31 March rose 6.0 percent on-year to S$596.8 million on strong contributions form network solutions and cyber security services, the telco said in a filing to SGX.

“As cyber security operations require considerable resources to deliver growth, the higher operational expenditure from Ensign coupled with decline in revenues for Mobile and Pay TV services and higher depreciation, resulted in net profit after tax at S$49 million, a 23 percent decline year-on-year,” Peter Kaliaropoulos, CEO of StarHub, said in the statement.

Operating expenses increased 9.4 percent on-year in the quarter to S$524.7 million, StarHub said.

Mobile revenue falls

For mobile, revenue fell 5.3 percent on-year to S$192.3 million on lower IDD, voice and excess data usage revenue, data subscription and value-added services, the filing said.

The number of post-paid mobile customers rose to 1.44 million by quarter-end, from 1.40 million at end-December and 1.37 million at the end of the year-ago quarter, although the average revenue per user (ARPU) fell to S$39 per month from S$41 in the fourth quarter and S$43 in the year-ago quarter, StarHub said.

Pre-paid mobile customers were at 789,000 at the end of the quarter, up from 788,000 at the end of the fourth quarter, but down form 918,000 at the end of the year-ago period, the telco said. ARPU for pre-paid customers was S$13, flat with the year-earlier quarter, but down from S$14 at end-December, StarHub said.

Pay TV subscribers decline amid piracy

Pay TV revenue fell 12.4 percent on-year in the quarter to S$70.7 million mainly on a lower subscriber base of 394,000, down 15,000 on-quarter and down 55,000 on-year, StarHub said.

ARPU for the segment was S$48 per month for the first quarter, flat on-quarter, but down from S$51 in the year-ago quarter, it said. That was mainly due to promotional offers to migrate existing cable subscribers to IPTV, StarHub said.

“The overall Pay TV market in Singapore continues to shrink due to piracy and alternative viewing options,” StarHub said. “Ongoing improvements are being made to the TV offering such as the recent reduction in subscription prices for HBO channels.”

Broadband competition persists

Broadband service revenue was flat on-year at S$47.1 million in the first quarter as 27,000 customers were added on-year, bringing the total to 495,000, StarHub said. But it added ARPU declined by S$2 on-year to S$31, mainly on promotional offers to gain subscribers and to migrate existing cable subscribers to fiber broadband.

“For the Home Broadband, sustained competition is expected due to the high broadband penetration in the market. StarHub will continue to differentiate itself by offering advanced Wi-Fi and mesh routers to enhance the experience of our customers,” the telco said.

Revenue from the sale of equipment, including mobile handsets and smart home equipment, rose 33.2 percent on-year to S$152.5 million, the telco said.

In the enterprise segment, revenue increased 14.1 percent on-year in the quarter to S$134.1 million, mainly on growth in managed services, domestic and international voice revenue and cyber security services, StarHub said.

“We will continue to invest in upgrading our cyber security solution capabilities to address the growing local and global demands for such services,” the telco said.

Dividend guidance

StarHub declared a dividend of 2.25 Singapore cents for the quarter, down from 4 Singapore cents in the year-ago quarter.

In its outlook, StarHub guided for 2019 service revenue to remain stable to a decline of 2 percent on-year.

The capital expenditure commitment for the year, excluding spectrum payment of S$282 million, is expected to come in at 11 percent to 12 percent of total revenue, StarHub said.

It added that it plans to pay a dividend of at least 9 Singapore cents a share, or 2.25 Singapore cents a quarter, with any payment over 9 Singapore cents to be made on the fourth quarter.


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