StarHub CEO hopes for year-end pick-up as management scraps earnings guidance

Singapore

STARHUB'S first-quarter earnings fell in spite of mobile and broadband subscriber gains, according to an interim business update from the mainboard-listed telco on Wednesday.

Net profit fell by 25.7 per cent year- on-year to S$40.2 million for the three months to March 31, as revenue fell 15.2 per cent to S$506.2 million.

Citing the coronavirus pandemic, StarHub management pulled its financial guidance for the year, including a planned nine-cent annual dividend.

Service revenue, which StarHub had earlier tipped to improve by between 1 per cent and 3 per cent this year, was down by 8.9 per cent on the year prior. The enterprise segment, buoyed by cybersecurity services, was the only division to post turnover gains. Mobile, pay-TV and broadband all reported declines.

StarHub chief executive Peter Kaliaropoulos told an earnings call that the impact of the virus showed up from late February on, and has "dried up" tourism-related income streams such as airport SIM card sales.

While StarHub added 28,000 subscribers from the year before, these were largely SIM-only lines that bring lower average revenue per user (ARPU), he said. Recontracting customers are also shunning handset bundles for cheaper SIM-only plans.

This trend is "typical in a tough economic environment", said Mr Kaliaropoulos, who hopes that users will return to bundles as new handsets hit the market towards the year's end.

StarHub's post-paid mobile ARPU fell to S$34 a month from S$39. Even so, Mr Kaliaropoulos shrugged off an analyst question on whether newcomer TPG Telecom's S$10-a-month SIM-only plan will add to the market price war.

StarHub's digital-only sub-brand giga can match TPG's low prices with its leaner cost structure, Mr Kaliaropoulos said, adding that customers will also adjust after the introductory pricing wears off.

Meanwhile, StarHub's fledgling cyber security business turned its first profit - to the tune of S$5 million, against a S$11.4 million loss before.

But with expansion plans now under review, Mr Kaliaropoulos warned that "there's no confidence that that number will be delivered every month; in fact, it will be fluctuating".

StarHub's management said it would update its earnings guidance "once there is greater visibility on the aggregate nature of the impact", which Mr Kaliaropoulos thinks will happen in the second half of the year.

But the group warned that revenue will fall "in most lines of business, to varying degrees".

"Certainly, in the second quarter, we will see the full impact," said Mr Kaliaropoulos, who called the hit "very severe" so far. "It's just a sort of cliff face... It is not a gradual change."

StarHub added S$0.03, or 2.06 per cent, to close at S$1.49 before the results were released.