StarHub quarterly profit drops to SG$86m after spectrum payment

StarHub's capex blew out by 124 percent after buying spectrum to improve its mobile network, with mobile revenues also dropping during the quarter.

Singaporean telecommunications provider StarHub has announced its financial results for the third quarter of 2016, reporting net profit of SG$86 million, down 28 percent from the SG$119 million reported a year ago due mainly to losses in mobile revenue.

Revenue for the July-to-September quarter was SG$585 million, down 3 percent year on year from SG$603 million. Earnings before interest, tax, depreciation, and amortisation (EBITDA) stood at SG$179 million, down 10 percent from SG$199 million.

As of September 30, capital expenditure was SG$150 million, up 124 percent from SG$67 million due to StarHub's SG$80 million spectrum payment.

"We have seen the broadband revenue curve moved upwards for the seventh consecutive quarter and our Enterprise Fixed revenue, the second largest revenue contributor, remains robust," said StarHub CEO Tan Tong Hai.

"We will continue to invest in our Enterprise business to drive our future growth."

A breakdown of revenue saw mobile contribute SG$299.4 million, down 3.6 percent from SG$310.6 million; pay TV add SG$93.6 million, down 3.7 percent from SG$97.2 million; broadband provide SG$54.7 million, down 7.1 percent from SG$51.1 million; enterprise fixed services contribute SG$98.4 million, down 1 percent from SG$99.3 million; service revenue add SG$546.1 million, down 2.2 percent from SG$558.2 million; and sale of equipment contribute SG$39.2 million, down 12.9 percent from SG$44.9 million.

StarHub's total mobile customer base grew by 98,000 over the last year, with 2.275 million customers in total: 902,000 prepaid customers and 1.373 million post-paid customers. Average revenue per user (ARPU) for post-paid mobile customers remained stable, at SG$70, while prepaid ARPU was SG$16, down from SG$18.

The telecommunications provider's pay TV business again declined, with its customer base shrinking by 35,000 over the year to a total of 507,000 customers. ARPU remained stable, at SG$51 per month.

Broadband services, however, saw an increase in customer base, from 473,000 last quarter up to 475,000 this quarter. ARPU also increased, from SG$33 up to SG$37 per month. StarHub attributed this to increased uptake of higher-speed plans.

Enterprise fixed services lost revenue across voice, thanks to lower local voice usage -- from SG$40.8 million down to SG$39.6 million -- while data and internet revenue was SG$253.2 million, up from SG$246.1 million.

StarHub last month suffered two outages across its home broadband network, saying they were due to distributed denial-of-service (DDoS) attacks on its Domain Name Servers (DNS).

StarHub said it experienced "intentional and likely malicious DDoS attacks" on its DNS, which caused high traffic and subsequent connection issues.

"These two recent attacks that we experienced were unprecedented in scale, nature, and complexity," it said.

StarHub has this year been working on improving its mobile network; in April, it announced that it had attained 4G indoor speeds of up to 1Gbps in partnership with Chinese technology giant Huawei, using the latter's small cell technology.

"There is more we can do to get better mileage out of our existing wireless spectrum," StarHub CTO Mock Pak Lum said at the time.

"We are closely tracking the development of this new small cell solution to help us enhance network quality quickly and cost-efficiently, providing customers with much faster data speeds even within buildings and in crowded areas."

StarHub also signed a memorandum of understanding with China Mobile International to collaborate on such things as research initiatives for evolving mobile network technologies; strengthening capabilities for complementary data business services; cooperating and sharing information on international mobile roaming; and developing business opportunities in relation to the Internet of Things (IoT).

StarHub in August announced a first-half net profit of SG$201.4 million, up 16.6 percent, on revenue of SG$1.18 billion, down 2.5 percent, and EBITDA of SG$375.3 million, up 5.3 percent.

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