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Hot stocks: StarHub shares down 2.5% on broadband competition worries

STARHUB on Thursday fell as much as 11 cents, or 2.5 per cent, to S$4.30 by noon, as analysts continued to express worry over intense competition in the broadband space. They noted that the telco's broadband revenue has fallen despite an increase in the customer base.

StarHub had on Wednesday evening posted a 10 per cent increase in Q4 net profit to S$94.2 million, on the back of a 5 per cent rise in revenue to S$647.4 million. This was led by higher sales of new iPhones and growth in mobile services. Analysts called the set of results "decent".

But OCBC noted that StarHub's revenue tumbled another 15.3 per cent in Q4 (albeit not as bad as the 17.4 per cent decline in Q3 2014), despite adding 8,000 new customers in the quarter.

Monthly average revenue per user (ARPU) fell further to S$34, the lowest in history, as more took up lower price plans.

PhillipCapital said: "We think ARPU may bottom out soon as broadband price competition stabilises."

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A cautious StarHub expects FY15 service revenue to grow in the low single-digit range, driven mainly by its enterprise fixed network and mobile services.

It has kept its Ebitda (earnings before interest, taxes, depreciation and amortisation) margin guidance at 32 per cent of service revenue, likely still wary about the continued price competition in the broadband space, said OCBC.

The research house maintained its hold rating on the stock, but bumped its fair value up from S$3.81 to S$4.17.

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