StarHub profit shrinks by 3.2 percent for first half of 2015

Singaporean telco StarHub has reported a loss of SG$5.7 million for the half year, thanks to declining broadband revenues and a stagnant mobile business.

Singapore's second-largest telecommunications company StarHub has released its second-quarter and half-year results, reporting a six-month net profit decrease of 3.2 percent year on year, from SG$178.5 million down to SG$172.8 million ($124.9 million).

The telco reported half-yearly earnings before interest, tax, depreciation, and amortisation (EBITDA) of SG$356.6 million ($257.9 million), a decrease of 2.2 percent from last year's SG$364.5 million. However, for the quarter to June 30, EBITDA rose by 3.8 percent, from the SG$187.4 million reported during the same period last year, to SG$194.5 million ($140.7 million).

Total revenue increased by 5.2 percent for the six-month period, from SG$1.15 billion to SG$1.21 billion, and by 2.3 percent for the three months from April to June, from SG$576.4 million to SG$589.5 million.

"We are delighted with our performance in the second quarter," said Tan Tong Hai, CEO of StarHub, on Wednesday night.

"We are especially heartened to see the residential broadband revenue increasing for two sequential quarters. This quarter, we registered customer growth in all lines of business and low churn rates, a testimony to our Hubbing strategy and quality service experience. We will continue to deliver value to our stakeholders."

StarHub attributed its gains in revenue to continuing growth across its pay TV and fixed-network services. For the first half of 2015, pay TV revenue grew by 0.8 percent year on year, from SG$192.2 million in the same period last year to SG$193.8 million this year; and fixed-network services revenue rose by 2.9 percent, from SG$182.2 million to SG$187.6 million.

Its pay TV subscriber base grew by 2 percent compared to the same quarter last year, up by 10,500 subscribers to a total of 545,000 customers as of June 30. ARPU was SG$52 for the second quarter, and SG$51 for the six-month period, remaining flat from the same periods in 2014.

The telco's mobile business was stagnant, with no change from the SG$616.2 million reported in the six months to June 2014. Its post-paid mobile customer base grew by 70,000 year on year for the second quarter, with average revenue per user (ARPU) of SG$69, a growth of SG$2. Prepaid ARPU also grew by SG$2, to SG$18, with 3,700 customers added in the quarter to reach a total customer base of 849,000 -- a drop of 19 percent year on year.

StarHub's broadband revenues fell by 7.4 percent for the half year, from the SG$104.9 million reported in the same period last year down to SG$97.1 million this year. ARPU dropped by 11.9 percent year on year for the first half of 2015, from SG$38 down to SG$33. The company's total broadband customer base grew by 4.1 percent, or 18,700 customers, however, from 456,000 customers reported in the six months to June 2014, and 475,000 customers from January to June 2015. The company added 1,900 customers in the quarter.

The company's total revenue was ultimately positive due to the company's sale of equipment, with this contributing growth from SG$52.3 million to SG$112.7 million -- a jump of 115.7 percent, or SG$60.4 million.

StarHub's outlook for the remainder of 2015 suggested continuing growth in service revenue.

"Based on the current outlook, and barring any unforeseen circumstances, we expect our group's 2015 service revenue to grow in the low single-digit range," the company said in its results.

"We expect our 2015 group EBITDA margin to be about 32 percent on service revenue. For 2015, we expect our CAPEX payments to be at about 13 percent of our total revenue. We intend to maintain our annual cash dividend of 20 cents per ordinary share for 2015."

Singapore's third-largest telco, M1, last month announced a SG$90 million net profit for the first six months of 2015, an increase of 3.8 percent year on year, with service revenue of SG$408.6 million.

M1's EBITDA for H1 was SG$166.9 million, a 1.4 percent increase from the same period last year. Mobile telecommunications revenue increased by 0.4 percent year on year to SG$333.1 million, with revenue from fixed services growing by 18 percent, to SG$39.5 million. M1 added 6,000 fibre customers during April to June, bringing its base to 114,000.

Singtel, the dominant telco in Singapore, has yet to provide its Q2 and H1 results, but revealed an 11 percent rise in net profit to SG$970 million for the quarter ending December 31, 2014, with EBITDA falling 2.8 percent to SG$1.23 billion due to higher costs of customer acquisition.

Singtel last week announced that it has switched on its tri-band 4G+ network using LTE-900, with plans to roll it out to shopping malls, new residential areas, and train tunnels.