StarHub’s 2Q19 net profit dropped 36 percent as mobile revenue fell

StarHub retail outletStarHub retail outlet

StarHub reported Tuesday its second quarter net profit dropped 36.1 percent on-year to S$39.5 million amid lower contributions from mobile, pay TV and broadband.

Revenue for the quarter ended 30 June fell 7.4 percent on-year to S$552.8 million, the telco said in a filing to SGX.

For the first half, StarHub reported net profit fell 25 percent on-year to S$93.5 million, which was around 45 percent of UOB KayHian’s full year forecast of S$206 million from a recent research note. Revenue for the first half was S$1.15 billion, down 0.9 percent on-year, StarHub said.

StarHub declared an interim dividend of 2.25 Singapore cent a share, down from 4 Singapore cents a share in the year-ago period.

Mobile Services

Mobile service revenue for the second quarter fell 9.9 percent on-year to S$192.3 million, mainly on lower IDD, voice and excess data usage, roaming, data subscription and value-added services revenue, which was partly offset by higher plan subscription and enterprise SMS revenue, StarHub said.

Post-paid mobile subscribers rose by a net 39,000 in the quarter to 1.477 million as of end-June, but post-paid average revenue per user (ARPU) was S$40 per month, down S$5 from end-June 2018, StarHub said.

The pre-paid mobile customer base was 789,000 at end-June, down by 93,000 on-year, mainly on the migration of pre-paid customers to SIM-only post-paid plans, StarHub said. Pre-paid ARPU was at S$14 at end-June, down S$1 from end-June 2018, the filing said.

“The quarter saw greater competitive intensity in the consumer mobile market …with the launch of our all-digital mobile brand – giga,” StarHub CEO Peter Kaliaropoulos said in the statement. “2Q2019 mobile revenue is stable compared to 1Q2019 despite aggressive price competition across the market.”

Pay TV

Pay TV revenue fell 23.6 percent on-year in the quarter to S$64.7 million, mainly on a lower subscriber base, the filing said.

As of end-June, pay TV householders were at 374,000, down 64,000 on-year, StarHub said, adding ARPU was at S$44 a month at end-June, down from S$53 at end-June 2018, mainly on promotional offers to drive migration of existing cable subscribers to fiber.

“Migration to fiber TV is expected to conclude by end of September. Consumers continue to explore various content options in the market and a lower customer base is impacting revenue,” Kaliaropoulos said.

Broadband

Broadband service revenue fell 2.2 percent on-year to S$45.1 million, mainly on lower ARPU, the filing said.

The number of residential broadband customers at end-June was 509,000, up 8.1 percent on-year, the filing said.

Revenue from sales of equipment fell 15.4 percent on-year in the quarter to S$110.4 million, mainly on lower volumes of handsets and smart home equipment sold, StarHub said.

“For the home broadband, sustained competition is expected due to the high broadband penetration in the market,” the filing said. “StarHub will continue to differentiate by offering new products like 1+1Gbps fiber and advanced mesh solutions.”

Enterprise Segment

On the upside, enterprise business revenue increased 14.6 percent on-year to S$140.3 million, mainly on higher revenue from cyber security and voice services, partly offset by lower contributions from managed services and domestic leased circuits, StarHub said.

“We continue to grow due to higher demands for cloud, voice and data network services, digital and cyber security solutions,” Kaliaropoulos said.

Outlook

In its outlook, StarHub said it expected 2019 service revenue to be stable to a decline of 2 percent on-year. It added it intended to pay out at least 80 percent of net profit as the dividend, with expectations of at least 9 Singapore cents a share, at a rate of 2.25 Singapore cents a quarter. Any payment over 9 Singapore cents would occur in the fourth quarter, the filing said.

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