StarHub Q1 profit falls 12.4% due to higher mobile phone subsidies

Handing out more handset subsidies and lower service revenue dragged down first-quarter earnings for telecommunications group StarHub even though revenue expanded.

Net profit for the three months to March 31 fell 12.4 per cent to S$73.7 million from the preceding year, it said in a Singapore Exchange filing on Friday.

As a result, earnings per share for Q1 slipped to 4.3 Singapore cents, down from 4.9 cents last year.

This was despite an 8.1 per cent rise in revenue to S$617.9 million in the same period.

StarHub said revenue grew mainly because of strong demand for new smartphones, which boosted equipment sales. However, that demand also led to a spike in the cost of equipment sold, which translated to higher operating expenses in Q1.

Broadband revenue also slid due to keen price competition, the group said, adding that it sees more opportunities in fixed and mobile services for enterprises.

Net asset value per share climbed to 13.1 cents as at March 31 from 8.6 cents as at Dec 31.

The group proposed an interim cash dividend of S$0.05 per ordinary share, unchanged from the previous year, which will be paid on June 5. It added in a statement that it intends to "maintain our annual cash dividend of 20 cents per ordinary share for 2015".

StarHub shares gained three cents to S$4.27 on Friday before its results were released.