StarHub earnings climb 27.5% on stronger broadband, enterprise revenue
MAINBOARD-LISTED StarHub's CC3 earnings excluding the effect of the Jobs Support Scheme (JSS) rose by 27.5 per cent for the second half of the year ended Dec 31 to S$81 million, up from S$63.5 million a year ago.
Without the adjustment to account for the JSS, net profit was up 1 per cent for the same period to S$81.4 million.
StarHub chief executive Nikhil Eapen noted during the earnings call on Friday (Feb 11) that earnings before interest, tax, depreciation and amortisation for the second half of the year stood at 29.9 per cent, higher than the 26 per cent guided for when the company reported its third-quarter earnings in November last year.
"This reflects operating efficiencies, cost discipline, as well as some delayed incurring of anticipated costs for our transformation (plans)," he said, referring to the company's 5-year growth roadmap launched last November, also known as Dare+.
The telco posted revenue of S$1.07 billion in the same period, a marginal decrease of S$0.3 million from figures posted a year earlier.
Within its different segments, StarHub saw 8.4 per cent growth in broadband revenue to S$98.9 million, as well as 6.4 per cent growth in revenue from its enterprise segment to S$372.6 million.
Within the broadband segment, average revenue per user (ARPU) stood at S$33 in the fourth quarter of last year, up from S$30 the year before. However, the number of subscribers declined from 498,000 to 484,000 in the same period.
As for the enterprise segment, the company noted that its cybersecurity services revenue grew by 1.1 per cent to S$73.4 million in the fourth quarter of last year. However, that still marked a decline of 7.5 per cent from the third quarter of last year as that quarter saw the delivery of a major project. Year on year, the cybersecurity services segment grew 21.7 per cent in 2021 to S$268.5 million.
Within the regional ICT services segment, the company also saw growth of 19.5 per cent year on year in the fourth quarter of 2021 to S$18.6 million. Dennis Chia, StarHub's chief financial officer, noted that Strateq, a digital solutions provider that the company acquired in 2020, grew almost 20 per cent of quarterly growth year on year.
Meanwhile, StarHub's entertainment segment's revenue registered a decline of 5 per cent to S$89.5 million; mobile revenue fell 0.7 per cent to S$270.9 million in the second-half of 2021.
Notably, the company's postpaid average revenue per user (ARPU) rose to S$30, while postpaid subscriptions rose from 1.44 million to 1.48 million in the second half of last year.
Still, prepaid ARPU remained lower at S$10 in the fourth quarter of last year, from S$11 a year ago. There were 468,000 prepaid subscribers in the same period, down from 564,000 subscribers in the year-ago period.
For the full year, StarHub's total revenue grew 0.7 per cent to S$2.04 billion. Net profit rose 17 per cent to S$148.3 million. With the effect of JSS, net profit fell 5.5 per cent to S$149.3 million.
Basic earnings per share stood at S$0.082, down 5.7 per cent from S$0.087 a year earlier.
The company proposed a final dividend of S$0.039 per share, higher than the S$0.025 per share declared in the same period a year ago. This brings the total FY2021 dividend to S$0.064, in line with the company's dividend policy to distribute at least 80 per cent of net profits.
The company has also guided for a dividend of S$0.05 per share in FY2022 and FY2023, based on expectations that the company's Dare+ outcomes are met.
Eapen said that the company has seen early indicators of Dare+, the company's five-year growth roadmap launched last November, bearing fruit with rising ARPU across all segments, in addition to strong 5G adoption and other encouraging metrics.
The company saw more than 300,000 5G subscribers as at end-FY2021, higher than the more than 250,000 subscribers it reported last November.
Eapen said: "These are proof points of our Infinity Play product and digital engagement strategies that delight Singapore consumers with experiences that drive consumption."
The company will introduce more products this year in different areas, such as one it calls "peace of mind", which could help protect consumers from phishing, fraud and other related issues.
Already, StarHub introduced CyberCover, a cyber protection insurance policy, together with Chubb Insurance Singapore on Feb 4, which will mitigate the impact of online risks like identity theft and unauthorised transactions.
Still, the company guided for lower Ebitda margins of at least 20 per cent on higher upfront investments in IT transformation, manpower, entertainment content and network repairs and maintenance to support its Dare+ business initiatives.
Additionally, higher electricity costs were accounted for as part of the company's Ebitda guidance. Chia noted that since December 2021, the company has seen electricity rates climb by approximately 2.5 times.
Eapen said the company expects to return to its 2021 Ebitda levels in 2023 and grow the company's after-tax profit level by S$80 million per annum.
"That doesn't include the recovery of roaming, synergies from M&As and some of the organic growth initiatives that we're driving quite hard so it's an upfront investment to yield returns," he said.
In separate bourse filings, StarHub announced the appointment of Teo Ek Tor as a member of the audit committee. He will remain a non-executive director on the company's board.
The company also appointed Lim Tse Ghow Olivier as an independent, non-executive director. He is a director of DBS and Raffles Medical Group.
StarHub shares closed flat at S$1.33 on Friday before the results were released.
READ MORE:
