StarHub mobile business revenue drops 11% from lowering demand

Singaporean telco StarHub has revealed its mobile business has experienced an 11% decrease in revenue, from SG$213.6 million to SG$190 million for the third quarter of the 2019 financial year. According to StarHub, the drop was largely fuelled by lower voice and excess data usage, roaming, and data subscriptions. 

Post-paid average revenue per user (ARPU) decreased from SG$44 to SG$39 year on year due to lower data subscriptions for the same period. Meanwhile, pre-paid ARPU also decreased slightly from SG$14 to SG$13 year on year due to a lower customer base that was caused by the migration of prepaid customers to SIM-only post-paid plans.

StarHub's pay TV and broadband revenues also took steps backward during the third quarter, with pay TV experiencing an almost 25% year-on-year decline for its revenue, having earned only SG$56 million. As of the end of Q3 2019, it currently has 347,000 Pay TV customers.  

Its broadband revenue, meanwhile, was SG$3.6 million lower compared to the same period a year ago. The company did add 32,000 customers over the past 12 months however, bringing its total broadband customer base to 505,000. 

On the whole, StarHub's total revenue dropped to SG$572.6 million for the three months to September, a decrease of 1.6% from the corresponding period a year ago, which the telco says was primarily attributed to less demand for its mobile, pay TV, and broadband services.

This drop was partially mitigated, however, by jumps in its enterprise and sales of equipment revenues. StarHub's sales of equipment revenue increased by SG$15.3 million year on year to SG$137.9 million. 

Meanwhile its enterprise business earned SG$145.5 million during the same period. This was an increase of 16.7% year on year for its enterprise business, with the telco saying the uptick was due to growth in its cybersecurity and managed services. Since last year, quarterly revenue from its cybersecurity services has more than doubled, from SG$16.5 million to SG$38.8 million.

The company's total operating expenseswere SG$1.5 billion, SG$22.3 million higher year on year. Its cost of sales and other operating expenses also increased by 1.7% and 1.3% year on year, respectively. 

Earnings before interest, tax, depreciation, and amortisation (EBITDA) and Service EBITDA both increased by 16% to SG$170 million and SG$153 million, respectively. Service EBITDA marginssat at 35% for Q3, which is just over a 6% increase from a year ago, while lower profits resulted in StarHub's net profit after tax for the first nine months of 2019 sitting at around SG$145 million -- SG$40 million, or 21.5%, lower compared to the first nine months of 2018. 

For its 2019 outlook, StarHub expects its service revenue for 2019 to decline by 2% to 3% year on year, while group service EBITDA margin is expected to be between 30% to 32%. The telco conglomerate also added in its guidance that it predicts depreciation and amortisation expenses to increase by approximately SG$6 million due to amortisation of intangible assets from recent acquisitions.

The Singaporean telco in 2019 underwent a headcount reduction that saw it reduce its cost of staff by 14% compared to last year. In October last year, the company said it would slash 300 jobs in non-customer facing functions. The job cuts formed part of the company's transformation initiatives, from which it expect to save SG$210 million over three years from 2019.

It also completed the move of its pay TV and broadband customers from cable connections to fibre last month.

"Over the past 10 months, StarHub assisted hundreds of thousands of customers to migrate from cable services to superior, high-speed fibre services," StarHub chief of consumer business group, Johan Buse said at the time.

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