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StarHub Q1 net profit down 15% on falling mobile, pay-TV service revenue

FIRST-QUARTER earnings took a tumble at telco StarHub - in spite of lower expenses - on the back of a revenue fall in mobile and pay-TV services.

Net profit was down to S$61.5 million for the three months to March 31, or a drop of 14.9 per cent on the previous year, according to unaudited financial results out on Thursday.

Turnover slid by 4.7 per cent to S$561 million, on lower service revenue as well as lower equipment sales. Mobile services account for 36.6 per cent of revenue - StarHub's biggest revenue category - while pay-TV contributed 14.4 per cent, and equipment sales, 19.6 per cent.

But those revenue declines were partially offset by an 18 per cent rise in enterprise fixed service turnover to S$117.5 million.

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The consolidation of the Accel Systems & Technologies Pte Ltd and D'Crypt Pte Ltd contributed to this growth. Absent the two acquisitions, enterprise fixed service revenue would have decreased by 0.7 per cent, largely on lower voice service revenue, the company noted.

Enterprise fixed services now make up 21 per cent of revenue mix, from 16.9 per cent previously. StarHub called this segment "a constant bright spot, with a third successive quarter of double-digit revenue growth".

The company added in its results statement: "In line with our plan to grow the business, we will continue to roll out new robotics, digital platforms and cybersecurity solutions to support Singapore's Smart Nation vision."

StarHub has picked up its first mobile virtual network operator (MVNO), which was named on Thursday morning as fibre broadband company MyRepublic. "This gives us the ability to offer customers more choices, better address customer segment needs and grow our mobile business amid the evolving landscape," the company said.

Earnings per share stood at 3.4 Singapore cents, against 4.2 Singapore cents the year before, while net asset value rose to 37.6 Singapore cents a share, from 34.4 Singapore cents as at Dec 31, 2017.

Capital expenditure was S$68 million for the quarter, or 12.1 per cent of revenue, fuelled by its S$31.6 million purchase of a Tai Seng building to house nationwide broadband network subsidiary Nucleus Connect's central office, as well as StarHub's data centre.

The company held to the guidance from its full-year results in February, forecasting a year-on-year decline of 1 per cent to 3 per cent in 2018 service revenue.

StarHub has declared an interim dividend of S$0.04 a share for the quarter, unchanged from the previous year. The book closure date is May 14 and the dividend will be paid on May 25.

The counter closed up by S$0.03, or 1.32 per cent, to S$2.31, before the results.