StarHub’s mobile, pay-TV revenue slide drives down Q1 earnings

4 May 2018

Singaporean fixed and mobile operator StarHub saw first-quarter net earnings dropping 15% year-on-year amid a slump in mobile and pay-TV revenues, as well as a decline in equipment sales, which was only partially offset by stronger enterprise fixed service revenue. For the quarter ending 31 March 2018, the telco booked total revenue of SGD561.0 million, down by 4.7% from SGD589.0 million in 1Q17, while service revenue was 1.4% lower at SGD450.8 million. Group EBITDA decreased 4.8% y-o-y to SGD152.2 million and service EBITDA dipped 3.7% to SGD144.5 million – resulting in a slightly lower service EBITDA margin at 32.1% versus 32.8% a year ago. First-quarter net profit plunged by 13.1% to SGD62.8 million from SGD72.0 million in the corresponding year-ago quarter, with StarHub conceding that falling turnover due to intense competition in the domestic consumer market segments took a chunk out of its bottom line. More encouragingly, the operator’s Enterprise Fixed revenue improved 18% y-o-y to SGD117.5 million buoyed by higher revenue from Data & Internet and Managed Services (which includes analytics, Cloud, ICT solutions, facility management and cyber security services). StarHub called the enterprise fixed segment ‘a constant bright spot, with a third successive quarter of double-digit revenue growth’. In terms of total revenue mix, mobile, pay-TV, broadband, enterprise fixed services and sales of equipment contributed 36.6%, 14.4%, 8.5%, 21% and 19.6% respectively, it said.

Mobile revenue – still the group’s single largest source of income – stood at SGD205.1 million in 1Q18, 7.1% lower when compared to the same period a year ago, as the total user base decreased by a net 8,000 y-o-y to 2.283 million. Within this figure, StarHub noted that the pre-paid base increased by a net 20,000, but post-paid customers fell 27,000 mainly due ‘to the one-time termination of 23,000 inactive legacy data-only lines in 3Q17’. Comparing to a year ago, StarHub said that both pre-paid and post-paid ARPUs had decreased by SGD2 – to SGD13 and SGD43 per month respectively. Broadband revenue, meanwhile, was slightly higher at SGD47.5 million compared to SGD47.2 million a year ago, attributed mainly to an increased mix of customers signed up to its higher speed fibre plans. Broadband monthly ARPU remained stable at SGD33, although the residential broadband customer base decreased by 1,000 to 469,000 households. Finally, pay-TV revenue was 10% lower y-o-y at SGD80.7 million due to a 38,000 drop in customer base to 449,000 households.

Going forward, StarHub anticipates its FY 2018 service revenue to be between 1% and 3% lower than in 2017, while the service EBITDA margin is expected to be between 27% to 29%. Further, in 2018 StarHub said that it also anticipates competition to intensify in the mobile business, in part due to the impending arrival of a fourth player in the shape of Australia’s TPG Telecom in 2H18. To counter this threat, StarHub ‘will continue to roll out new robotics, digital platforms and cyber security solutions to support Singapore’s Smart Nation vision’. It is also developing an MVNO strategy: yesterday (3 May) the telco announced the signing of a deal under which fibre broadband provider MyRepublic (Singapore) will lease network capacity from StarHub to offer consumer mobile services. Commenting on the deal, StarHub chief marketing officer Howie Lau said: ‘With this partnership comes the ability for us to offer customers more choices, better address customer segment needs and grow our mobile business amid the evolving landscape.’

Singapore, StarHub