StarHub first quarter net income tumbles on COVID-19, sets out 5G ‘fast-track’

7 May 2020

Singapore’s second largest telco by subscribers and revenue, StarHub, has reported its financial results for the three months ended 31 March 2020, with net profit tumbling 25.7% year-on-year to SGD40.2 million (USD28.3 million) from SGD54.0 million, impacted by the ongoing COVID-19 pandemic. The operator’s Q1 2020 total revenue stood at SGD506.2 million, down SGD90.6 million, or 15.2%, y-o-y, mainly due to lower revenues from mobile, pay-TV, broadband and sales of equipment, which was only partially offset by higher revenues from its Enterprise business unit. In its filing, StarHub noted that when compared with the corresponding period of 2019, mobile service revenues in 1Q20 were down 15% at SGD163.5 million as a result of ‘lower IDD, excess data usage, lower roaming due to a significant drop in global travel caused by the COVID-19 outbreak, lower plan subscriptions and VAS revenues, partially offset by the increase in voice usage’. StarHub counted 2.170 million mobile subscribers at 31 March 2020, down from 2.228 million a year earlier, including 1.466 million post-paid users (up from 1.438 million). Going forward, the telco expects that global travel restrictions and ‘circuit breaker measures at home’ will likely hit full-year revenue and profitability.

First-quarter EBITDA, meanwhile, dropped 15.9% on an annualised basis to SGD136.2 million – of which service EBITDA was SGD125.7 million (down 16.0%); service EBITDA margin was 31.1% (down 2.6pp). Group CAPEX amounted to SGD35.0 million in the three-month period, representing 6.9% of total revenue. CAPEX was SGD10.4 million lower y-o-y in Q1 2020, mainly due to a decrease in purchase of property, plant and equipment. As of 31 March 2020, StarHub’s total outstanding capital expenditure commitments amounted to SGD432.3 million, including the outstanding commitments for 4G spectrum rights of SGD282.0 million.

In terms of other key business segments, StarHub said pay-TV service revenue in 1Q20 was 33.8% lower y-o-y at SGD46.8 million, mainly due to a lower subscriber base (down 67,000 to 327,000) and lower ARPU (down SGD10 to SGD38), while broadband revenue dipped 11.4% to SGD41.7 million from SGD47.1 million ‘mainly due to lower ARPUs as a result of promotional activities in respect of cable of fibre migration from the previous year’. StarHub reported a total of 502,000 broadband subscribers on its books at 31 March 2020, up marginally from 495,000 a year earlier. The enterprise business, however, posted a 13.9% rise in revenue to SGD152.8 million, led mainly by a 136.8% surge in cybersecurity services revenue to SGD62.4 million.

StarHub has withdrawn all financial guidance for 2020, however, citing ‘uncertainty over the impact of government support measures and the economic situation due to the pandemic’. Shareholders will be updated once there is greater visibility, it added. Notwithstanding the above, the operator remains ‘fully committed to and has the resources to continue with its strategic initiatives’. These include setting out on its 5G joint project with fellow telco M1, closing the SGD82 million purchase of a stake in Malaysian business solutions firm Strateq, and expanding its enterprise business. On the key 5G project, StarHub said that it intends to fast-track the rollout of 5G services, with more details to be released closer to commercial readiness.

Singapore, StarHub