StarHub rings in 9.6% rise in Q2 earnings

Singapore

STARHUB on Wednesday posted a 9.6 per cent increase in net profit for the second quarter ended June 30, 2016, to S$108.6 million from S$99.1 million in the year-ago period.

This came despite a 0.6 per cent dip in revenue to S$585.7 million from S$589.5 million last year. Earnings per share (EPS) for the quarter were up 10.5 per cent to 6.3 Singapore cents from 5.7 Singapore cents.

The company announced an interim dividend of S$0.05 per ordinary share.

For the half year, StarHub posted a healthy 16.6 per cent growth in net profit, to S$201.4 million from S$172.8 million a year ago. Revenue was S$1.18 billion, down 2.5 per cent from S$1.21 billion. EPS was up 16 per cent to 11.6 Singapore cents, from 10 Singapore cents last year.

For the half year, StarHub's Ebitda (earnings before interest, taxes, depreciation and amortisation) increased 5.3 per cent to S$375.3 million from S$356.6 million in H1 2015. Correspondingly, Ebitda margin was higher at 34.2 per cent versus 32.6 per cent for the same period last year.

For the quarter, the company's Ebitda was lower by 1.3 per cent at S$192 million, from S$194.5 million, and Ebitda margin was at 34.7 per cent, down from 35.1 per cent.

For the second quarter, StarHub's cost of sales, at S$216.8 million, was 3.9 per cent lower than S$225.6 million one year ago. For the half year, cost of sales at S$446.8 million was 12.8 per cent lower than S$512.2 million last year.

The lower cost of sales was mainly due to lower cost of equipment sold and traffic expenses. The lower cost of equipment sold for both the quarter (down 3.6 per cent) and half year (down 22.6 per cent) was due to lower handset volume and reduced sales of high-end models.

In terms of total revenue mix for the half year, mobile continued to be the major contributor at 51 per cent. Enterprise fixed services have now overtaken pay-TV as the second largest contributor at 17 per cent. Pay-TV, broadband, and sales of equipment contributed 16 per cent, 9 per cent and 7 per cent respectively.

Overall mobile service revenue of S$305.3 million for the second quarter was 1.8 per cent lower than S$310.8 million one year ago. For the half year, mobile service revenue of S$603.4 million was 2.1 per cent lower than S$616.2 million last year.

The lower revenue was primarily due to lower usage revenue from local voice as well as IDD and roaming services. The decrease was partly mitigated by increase in subscription revenue from higher post-paid mobile subscriber base. Post-paid average revenue per user (Arpu) with IDD included was S$71 for the quarter, up S$1 from last year. For the half year, post-paid Arpu (including IDD) was S$70, also up S$1 from last year.

As at June 30, post-paid mobile subscriber base was 1.36 million after the quarter's net addition of 20,000 subscribers. Compared to a year ago, post-paid customer base grew by 51,000 customers or 3.9 per cent. The percentage of customers on tiered data mobile subscription plans was higher at 66.3 per cent as at June 30, up from 62.7 per cent a year ago.

Pay-TV service revenue for the second quarter was down 2.4 per cent to S$95.4 million from S$97.8 million one year ago. For the half year, the figure was S$190.3 million, down 1.8 per cent from S$193.8 million. The decrease in subscription revenue from a lower subscriber base was partially mitigated by higher advertising revenue.

As at June 30, pay-TV subscriber base was 518,000 after the quarter's net churn of 10,000 subscribers. Pay-TV subscriber base was down by 27,000 subscribers or 5 per cent year on year. Arpu from pay-TV was steady at S$52 for the second quarter and S$51 for the half year.

For the second quarter, broadband service revenue was up 11 per cent to S$54.4 million from S$49 million one year ago. For the half year, it was up 11.1 per cent to S$107.9 million, from S$97.1 million.

The increase was due to higher subscription revenue, installation and other revenue. An increased mix of customers on the fibre and higher speed plans drove the increase in subscription revenue and Arpu, which rose S$4 to S$37 per month in second quarter and half year.

As at June 30, total residential broadband subscriber base was 473,000 - 2,000 lower than a year ago.

Revenue from enterprise fixed services in the second quarter was up 1.9 per cent to S$98.6 million from S$96.7 million one year ago. For the half year, it was up 3.6 per cent to S$194.4 million, from S$187.6 million.

Based on the current outlook, the company has revised its 2016 service revenue to be at about 2015's level and Ebitda margin at about 32 per cent of service revenue. The company expects its capital-expenditure payments to be about 13 per cent of its total revenue, excluding the spectrum payment due later this year. For 2016, StarHub intends to maintain its annual cash dividend of 20 cents per ordinary share.