StarHub posts higher Q2 profit, but warns of slow biz fiber takeup

Singapore telco posts net profit of S$87 million on back of 4 percent rise in revenue, but says non-residential fiber takeup could slow as operational issues still unresolved by various parties in nationwide rollout.

Better profit margins helped Singapore telco StarHub to an 11.4 percent rise in its second quarter 2012 net profit to hit S$87 million (US$69.8 million). This was on the back of a 4 percent rise in revenue to S$591 million (US$474 million) for the same period over last year.

In the company's results released Wednesday, it noted that profit margins--or earnings before interest, taxes, depreciation (EBITDA) margin--was at 32 percent for the three months ended June, marking an increase of 1.6 percentage points from a year ago.

StarHub said overall expenses were up 1.7 percent to S$485.2 million (US$389.8 million) in the same period, largely due to the higher cost of services which had gone up by nearly 12.9 percent to S$234.4 million (US$188.3 million). The higher cost of sales was driven by higher programming, production and carriage costs incurred for securing broadcast rights for the Uefa Euro football tournament 2012 event in June, it added.

For its mobile segment, StarHub added about 1,100 customers to its post-paid user base for the quarter, It alos noted the "sale of Android phone models has continued to improve". 

"About 60 percent of the phones we sell are Android phones," said StarHub CEO Neil Montefiore, during an earnings call Wednesday with reporters.

The company reiterated its intentions to introduce tiered data bundles to further monetize data growth.

Urging regulator to do more to resolve non-residential fiber delays
In its broadband segment, StarHub said it expected to see higher takeup of fiber services by retail customers with the rollout of Singapore's next generation nationwide broadband network (NBN).

However, it pointed out that issues still persisted on the corporate front. "The takeup by commercial customers may continue to be slow as certain operational issues have yet to be satisfactorily resolved by the various parties involved in th NBN rollout," said StarHub.

In the earnings call, COO Tan Tong Hai said "the key thing was not just up slots" but improving the quality of service. He called for tighter minimum standards to be set for the network company in order to meet demand for non-residential installations, adding that the telco had "put forward its request" to the regulators to do so.

In its previous earnings call in May, StarHub also raised complaints over delays in fiber installations  as the lag affected its access to service corporate customers in as many as 20,000 buildings.

Following growing public complaints over delays, IT regulator Infocomm Development Authority of Singapore (IDA) in July revised the contract for network company OpenNet--the consortium appointed to build the national fiber infrastructure--requiring higher standards to be met, such as raising the number of installation slots from 2,400 to 3,100 per week .

Late last month, IDA also implemented a new quality of service (QoS) framework which generally meant OpenNet had to meet higher standards of performance such as establishing a minimum timeframe to complete installations or face a fine if it failed to do so.


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