SINGAPORE (May 6): StarHub is withdrawing its financial guidance for the year after reporting earnings of $40.2 million for 1QFY2020 ended March, some 25.7% lower than earnings of $54 million a year ago.
This came on the back of a 15.2% decrease in the telco’s total revenue to $506.2 million from $596.8 million in 1QFY2019. This was due primarily to lower revenues from the group’s mobile, Pay TV, broadband and sales of equipment segments, but was partially offset by higher revenue contributions from the enterprise business segment.
Notably, the group’s mobile segment revenue took a hit from the Covid-19 pandemic, booking a decline of 15% to $163.5 million due to lower postpaid and prepaid mobile revenues. StarHub notes that the outbreak had caused decreases in inbound and outbound tourists, as well as lower data subscriptions.
Pay TV service revenue for the quarter under review slumped 33.8% year-on-year due to a lower subscriber base and lower ARPUs due to promotional activities in respect of the cable to fibre migration from the previous year.
However, StarHub’s enterprise business segment bucked the trend with a 13.9% increase in revenue due to higher contributions from cyber security services, but partially offset by lower revenues from voice services, internet services and domestic leased circuits, as well as managed services.
StarHub’s total operating expenses fell 14.5% to $448.4 million due to lower cost of sales and other operating expenses.
Correspondingly, profits from operations fell 17.8% to $59.3 million from $72.1 million last year.
As at end-March, cash and cash equivalents stood at $218.3 million.
StarHub notes that the virus is expected to have a material impact on its revenue and profitability for the year, and is bracing for varying degrees of revenue declines for most business segments
In light of the uncertainty, StarHub is withdrawing “all guidance” for FY2020. In February, the group had announced its decision to maintain its FY2019 dividend of nine cents per share in FY2020 after its 4QFY2019 revenue more than doubled by 115.6% y-o-y to $33.3 million.
“The group remains fully committed to and has the resources to continue with its strategic initiatives such as the closing of the Strateq acquisition, the commencement of the 5G project, the IT transformation program, greater commitment to the enterprise business division and other long-term transformation initiatives,” says StarHub.
“The group will provide more information on the net impact of all these measures in the second half of this year when there is greater clarity around both the relevant Government measures as well as the economic situation,” it adds.
Shares in StarHub closed three cents higher, or 2.1% up, at $1.49 on Wednesday prior to the results announcement.
