StarHub H1 earnings up 7.1% to S$82.1 million despite revenue staying largely flat

MAINBOARD-LISTED telco StarHub on Wednesday (Aug 14) announced a net profit of S$82.1 million for the half-year ended June, up 7.1 per cent from S$76.7 million in the year-ago period.

Earnings per share rose 8.5 per cent to S$0.046, from S$0.042 in the corresponding period the year before.

The improvement in earnings comes despite revenue staying largely flat at S$1.1 billion in H1, mainly due to lower contributions from its mobile, broadband and entertainment segments, as well as sales of equipment. Revenue from these segments fell 4.3 per cent, 1.4 per cent, 3.9 per cent, and 6.4 per cent, respectively.

Chief of the telco’s consumer business group Johan Buse attributed the fall in mobile revenue to a shift from device plans to SIM-only plans. Still, the company saw an increase in postpaid subscribers as it signed a new mobile virtual network operator (MVNO).

In May, the MVNO Eight launched its service with a free tier offering 88 gigabytes of data for 88 days.

When asked if such plans are cannibalising the telco’s own services, Buse said that this was not the case and that there is clear differentiation between StarHub’s mobile plans and those of its partners.

“You have a very price-sensitive cohort in the market which basically doesn’t care about (having) the best connectivity and is willing to sacrifice a number of things, and there is a sizeable segment for which roaming, quality of service, 5G (service) are important, so there is segmentation,” he said.

The total revenue decline was partially mitigated by higher contributions from the telco’s enterprise business, which registered a 7.2 per cent increase to S$425.7 million.

This was mainly due to higher revenues from managed services and cybersecurity services; partially offset by lower revenues from data and Internet, voice services and regional ICT (information and communication technology) services.

StarHub has declared an interim dividend of S$0.03 per share for H1, compared to an interim dividend of S$0.025 per share in the corresponding year-ago period.

The company has previously guided for a full-year dividend per share of at least S$0.06 in 2024.

The group said this took into account short to mid-term business conditions, cash flow and investment requirements, and results expected from its ongoing business transformation initiatives.

Chief of finance Dennis Chia said the company’s capex commitments will accelerate towards the end of 2024 before tapering off in 2025, as the last investments from its Dare+ initiative are made.

As at end-June, StarHub’s cash and cash equivalents stood at S$564.6 million, with free cash flow of S$101.6 million.

Chief executive Nikhil Eapen said that the company has been investing more capital towards its growth platforms, such as its projects at the Punggol Digital District and National University of Singapore.

He added that StarHub is also in a good position to acquire new capabilities around digital services and cloud services for its enterprise segment in South-east Asia.

While Eapen declined to comment on market speculation on whether the company would merge with Keppel’s telco subsidiary M1, he said that having low leverage is “a great thing”.

He added that the telco has the firepower and track record for consolidation if and when the opportunity becomes available.

Shares of StarHub closed 0.8 per cent or S$0.01 higher at S$1.29 on Wednesday, before the announcement.