You are here

StarHub Q2 profit falls by 36.1% on broad business declines

Losses chalked up in cybersecurity could soon taper off, suggests CEO

Singapore

MAINBOARD-LISTED telco StarHub, which again reported a double-digit earnings slide for its second quarter, might yet turn its new, loss-making cybersecurity businesses around.

Chief executive Peter Kaliaropoulos suggested in an earnings call on Tuesday that the losses chalked up in cybersecurity could soon taper off - even though weaker operating profits have torpedoed the bottom line.

StarHub's net profit was down by 36.1 per cent year on year, to S$39.5 million, for the three months to June 30. Revenue slid by 7.4 per cent, to S$552.8 million, on lower turnover from the core mobile, pay-television and broadband segments - even as the enterprise division saw a rise, fuelled by cybersecurity contributions.

sentifi.com

Market voices on:

"We have a number of one-offs that are impacting us in this particular quarter," Mr Kaliaropoulos told the call.

For instance, a cable-to-fibre migration - which is slated to finish this year - has squeezed broadband and pay-TV margins as StarHub dangles promotions to keep customers.

For the half year, net profit fell by 25 per cent, to S$93.5 million, on a 0.9 per cent dip in revenue, to S$1.15 billion.

But, excluding cybersecurity losses and one-off cable migration costs, the half-year earnings would have been 10.1 per cent lower instead, Mr Kaliaropoulos noted.

Service revenue fell by 3.1 per cent in the first six months, but StarHub maintained its full-year guidance for a range from zero growth to a 2 per cent decline, despite the half-year drop.

"We expect a lot of the growth towards year-end to come from the Ensign and D'Crypt side of the business," said Mr Kaliaropoulos, adding that "we don't expect losses of this magnitude for the rest of the year".

The cybersecurity arm comprises 65 per cent-owned D'Crypt, and Ensign InfoSecurity, a joint venture with state investor and controlling shareholder Temasek Holdings.

StarHub, which announced plans in February to cut dividends, will pay 2.25 Singapore cents a share this quarter, down from four cents before.

Citi analyst Arthur Pineda said in a report that the profit decrease may narrow in the second half, "as some cost items fall off". But, sticking to a "sell" call, he added: "We find the stock... non-compelling, with declining earnings outlook and contracting yield."

StarHub lost S$0.02, or 1.33 per cent, to S$1.48, before the results.