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StarHub raises profit by just SG$1m

Net profit grew by just 1.6 percent to SG$372.3 million on revenues of SG$2.44 billion, while it experienced growth in its pay TV business and fixed network services.

Singapore's second-largest telecommunications company StarHub has released its results for the 2015 financial year, reporting a net profit of SG$372.3 million, a slight rise over last year's SG$370.5 million.

The telco also raised its revenue marginally, growing by 2.4 percent from the SG$2.39 billion announced for FY14 to SG$2.44 billion for FY15.

Earnings before interest, tax, depreciation, and amortisation (EBITDA) fell by 4.7 percent, however, from SG$747.9 million down to SG$712.7 million.

Cash and cash equivalents stood at SG$173.4 million at the end of the period, a loss of SG$90.8 million for the year. The telco said this was attributable to higher working capital needs, higher income tax, and lower cash flows from operations.

Operating expenses also rose by 4.7 percent or SG$91.5 million over the year, from SG$1.96 billion up to SG$2.05 billion.

Mobile contributed SG$1.24 billion to StarHub's total revenue, a drop of SG$7.8 million year on year, but still 50.7 percent of all revenue. The company attributed this to lower prepaid and roaming revenue.

The telco's mobile customer base grew by 41,000 over the year, from 2.15 million to 2.19 million, although prepaid customers fell by 9,000, down to just 862,000. StarHub added 48,000 post-paid customers over the year, bringing its total to 1.33 million as of the end of FY15. It has a total Singapore market share of 26.7 percent.

Average revenue per user (ARPU) for prepaid customers rose by SG$1, to SG$18, while post-paid ARPU rose by SG$2, to SG$68, which the company said was due to more customers signing up to its new 4G tiered data plans.

StarHub's pay TV business contributed SG$391 million, or 16 percent of total revenue, a rise of SG$1.3 million year on year due mainly to customers upgrading their services to higher-costing HD subscriptions. It dropped 6,000 customers over the financial year, however, from 542,000 to 536,000, with an average monthly churn rate of 0.8 percent during the fourth quarter.

ARPU for pay TV customers stayed the same for the year, at SG$51.

At the end of last year, StarHub unveiled plans for a new MediaHub building, which will house a social media analytics lab and an adaptive production studio to support its pay TV business.

The company's broadband business contributed SG$200.3 million to total revenue, a drop of SG$1.6 million from last year, and just 8.2 percent of all revenue, despite gaining 7,000 customers. As of the end of December, StarHub had 476,000 broadband customers.

For Q4, it had an average monthly churn rate of 1.1 percent. Residential broadband ARPU fell by SG$2 over the year, to SG$34.

"We are happy that our customer-centric focus has continued to serve us well, as reflected by the low churn rates across our businesses," StarHub CEO Tan Tong Hai said in a statement.

"Our broadband revenue gained momentum as it registered growth in four sequential quarters.

"Post-paid mobile continued to do well for us, and our TV business showed resiliency despite competition. We also witnessed steady growth in our enterprise business."

Fixed network services rose by SG$6.6 million in revenue, to contribute 15.8 percent and SG$384.9 million to total revenue over the year. Of its fixed network services, data and internet contributed SG$331.1 million, an increase of 3.2 percent year on year, while voice services contributed SG$53.8 million, a drop of 6.3 percent.

StarHub said this reflected the continuing trend in customers moving from voice to data-centric services.

Sale of equipment saw the biggest growth as a revenue contributor, adding SG$228.3 million to the company's total FY15 revenue -- SG$58.6 million more than in FY14, and 9.3 percent of total revenue. StarHub attributed this to increased quantities of more expensive, higher-end devices being sold.

For FY16, StarHub said it expects service revenue to grow in the low single digits.

"The economic outlook in 2016 looks uncertain, but we will continue to focus on delivering better value for our customers and driving shareholders' return, such as maintaining our annual cash dividend," Tan said.

Singapore's largest telco, Singtel, last week announced a net profit of SG$954 million for the quarter ending December 31 -- down SG$16 million from the SG$970 million reported for same quarter in 2014 -- on revenues of SG$4.47 billion, up 1.1 percent year on year. EBITDA was SG$1.22 billion.

Earlier this month, when Singtel announced that it would be offering a fibre broadband service pushing speeds of up to 10Gbps to homes, StarHub responded by saying that it would rather focus on "meeting customers' real needs".