SINGAPORE (Nov 5): StarHub saw its earnings rise slightly to $58.0 million for the 3Q19 ended September, from $57.0 million a year ago.
However, the group reported a 1.6% dip in revenue to $572.6 million during the quarter, from $582.2 million a year ago.
The decline was mainly due to lower revenues from its Mobile, Pay TV and Broadband businesses.
This was partially mitigated by higher revenues from the Enterprise Business and Sales of Equipment.
Mobile services saw lower revenues due to lower IDD, voice and excess data usage, roaming, data subscriptions and value–added services revenue, which was partly offset by an increase in subscriptions and enterprise SMS revenues.
The revenue decline from Pay TV was mainly due to a lower subscriber base and average revenue per user (ARPU) due to the migration to fibre and related promotional activities.
Broadband service revenue mainly saw lower ARPU as a result of promotional activities encouraging the switch to fibre, resulting in a dip in revenues.
The Enterprise Business segment saw an increase in revenues due to cyber security services and managed services, which was partially offset by lower voice services, Internet services and domestic leased circuits revenue.
Sales of equipment revenue rose due to a higher mix of premium handsets sold.
Earnings were impacted by the losses incurred from Cyber Security Services of $3.7 million, compared to a profit of $4.4 million a year ago. Without the Cyber Security Services losses, profit from operations would have been $83.6 million instead of $80 million.
StarHub also saw higher margins from Sales of Equipment, higher other income from TPG tunnel fees cost recovery, and lower operating expenses. This was offset by the lower revenues from Mobile, Pay TV and Broadband.
StarHub intends to payout at least 80% of earnings as dividend, and still intends to pay a dividend of 9 cents per share at 2.25 cents per quarter.
The telco expects FY19 service revenue to decline between 2% to 3% y-o-y, with EBITDA margin to be between 30% and 32%.
Depreciation and amortisation expenses are expected to rise by about $6 million for FY2019 due to amortisation from recent acquisitions.
Capital expenditure commitments are expected to be around 8% to 9% total revenue, excluding the outstanding commitments for 4G spectrum rights of $282 million.
As at end-September, cash and cash equivalents stood at $153.6 million.
StarHub is a year into its transformation programme, which had four pillars: delivering market-leading customer experiences, accelerating value creation from its core business, realising growth from new opportunities, and enhancing efforts to transform digitally.
To this end, StarHub CEO Peter Kaliaropoulos believes that headway has been made.
For example, over $210 million of cost savings have been identified, while cyber security revenue growth has seen an increase of 135% y-o-y.
Meanwhile, the group says it has also seen a strong take-up of StarHub’s giga plans.
“Looking at our transformation progress, we are pleased to note that the programme is tracking well and may likely exceed the targeted $210 million gross savings by FY2021,” says Kaliaropoulos.
“Some of the savings are being redirected to fund our digital transformation and new acquisition opportunities and enhance our customers’ overall experience when using our products and services,” he adds.
Shares in StarHub closed 2 cents higher, or up 1.5%, at $1.32 on Tuesday. Year to date, the counter is trading nearly 24% lower.
