StarHub clocks SG$109m enterprise revenue after Accel purchase

StarHub's enterprise fixed services segment grew by 11 percent to make SG$109.4 million in quarterly revenue following its acquisition of cybersecurity provider Accel.

Singaporean telecommunications provider StarHub has attributed its third quarter results to its enterprise fixed strategy, after clocking lower sales across its mobile, broadband, and pay TV segments.

For the quarter ending September 30, StarHub reported net profit of SG$76.5 million, down 11 percent year on year, on revenue of SG$580.4 million, down 0.8 percent.

Earnings before interest, tax, depreciation, and amortisation (EBITDA) was SG$176 million for the three-month period, down 1.7 percent.

Its only segment to mark an increase in revenue was enterprise fixed services, which brought in SG$109.4 million, up 11.3 percent.

"This quarter, we are further seeing the fruits of our growth strategy as shown by the encouraging double-digit increase in our enterprise fixed revenue," StarHub CEO Tan Tong Hai said.

"We will continue investing in the enterprise space to drive our future growth."

StarHub attributed its fixed enterprise success to growth in data and internet services, to SG$96.9 million in revenue -- which was partially offset by lower voice services revenue down to SG$12.6 million -- as well as its acquisition of Accel Systems and Technologies for SG$26.22 million during the quarter.

"The growth in fixed service revenue was partly due to the consolidation of Accel Systems & Technologies (ASTL), a newly acquired cybersecurity solutions provider," StarHub said.

"Excluding ASTL's results, enterprise fixed service revenue would have increased by 4.3 percent."

StarHub had in May acquired a 51 percent controlling stake in Accel for SG$19.38 million, confirming in July that it would acquire the remainder of the company in two stages: 29.4 percent in phase 2 in July, and 19.6 percent in phase 3, which will take place by the first quarter of 2020.

"Accel's cybersecurity solutions complement our network-based capabilities, making us well placed to compete in major government and commercial cybersecurity tenders," the CEO said at the time.

"This acquisition further demonstrates our confidence in growing the enterprise business as we execute on our growth strategy."

StarHub's purchase was aimed at boosting its cybersecurity offerings in order to sell a "full spectrum" of cybersecurity products and services, as well as augmenting the research and development capacity of its Cyber Security Centre of Excellence.

During the quarter to September 30, mobile contributed SG$297 million in revenue, down 0.8 percent, which StarHub said was mainly due to lower usage from voice and roaming services, partially offset by growing data usage.

As of September 30, StarHub had 1.36 million post-paid customers at an average revenue per user (ARPU) of SG$69 per month, and 895,000 prepaid customers at an ARPU of SG$14. Its total Singaporean mobile market share was 26.6 percent, down slightly year on year.

Its residential broadband customers numbered 466,000 and fibre broadband customers 376,000 for total broadband revenue of SG$53.2 million, down 2.8 percent due to its lower subscriber base despite more customers taking on higher-cost fibre plans.

StarHub's pay TV business brought in SG$85.7 million in revenue, down 8.5 percent, due to losing 40,000 customers during the year. Its total pay TV customers numbered 467,000 by the end of September at an ARPU of SG$51.

The remainder of its revenue was produced by the sale of equipment, which brought in 10.6 percent less at SG$35 million, and service revenue, which brought in SG$545.4 million, down 0.1 percent.

The telco's spending was slightly up during the quarter due to its purchase of 4G spectrum to improve its network, having bought 3x 10MHz in the 700MHz band, 1x 10MHz in the 900MHz band, and 4x 5MHz in the 2.5GHz band for SG$349.6 million.

The chief executive also pointed towards the company's new partnership with OCBC Bank, which will see the two companies use data insights from each other's customers to jointly develop products and services that "enhance customers' connected lifestyles".

They will spend SG$6 million on research, development, and marketing over the next year, with StarHub and OCBC saying they would make use of artificial intelligence and data from Internet of Things (IoT) devices.

StarHub has also been trialling 5G this year, with tests alongside Huawei in January attaining speeds of 35.15Gbps using millimetre-wave (mmWave) spectrum as well as 64 Quadrature Amplitude Modulation (QAM).

StarHub in August announced a half-year net profit of SG$159 million, down 20.9 percent year on year.

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