StarHub second quarter sees net profit drop over a third

Lower Pay TV and mobile revenue sees Singaporean telco head downwards.
Written by Chris Duckett, Contributor

StarHub's enterprise business was the only division of the Singaporean telco to head in a positive revenue direction for the second quarter to June 30, gaining a 15% increase to register SG$140 million.

Releasing its results on Tuesday, StarHub disclosed a 10% drop in mobile services for the second quarter, an almost 25% drop in Pay TV revenue year-on-year from SG$85 million to SG$65 million, a 2% drop in broadband services, and a 15% drop in equipment sales.

Overall, this gave StarHub revenue of SG$553 million for the second quarter, a decrease of SG$44.5 million from this time last year.

Looking at the first half, the reading was little better, although equipment sales made a positive contribution, with overall revenue down 1% to SG$1.15 billion.

For its mobile business, StarHub said it added 101,000 post-paid customers and lost 93,000 pre-paid customers compared to last year, with its average revenue per user (ARPU) dropping by SG$5 to SG$40. StarHub had 26% of the Singaporean market at June 30, against 27% a year ago.

It was a similar situation for its broadband business, which increased customers by 38,000 over the preceding twelve months, but ARPU dropped SG$3 to SG$29. StarHub said its ARPU reduction was due to promotional offers to drive additions, and move customers from cable connections to fibre.

The telco saw 64,000 customers leave its Pay TV compared to this time last year, with ARPU down SG$9 to SG$44.

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In its one bright spot, the enterprise segment, StarHub saw its data and internet revenue, as well as revenue from managed services, both drop 6%, while voice revenue jumped by 13%, and cyber security revenue spiked 161%.

Looking at profitability, Starhub saw its second quarter earnings before interest, tax, depreciation, and amortisation (EBITDA) drop 6% to SG$146 million, and net profit collapse by 37% to SG$39 million compared to the last year. For the half year, EBITDA was steady at SG$308 million, while net profit was down by 30% to SG$89 million.

Despite its revenue spike, cyber security was a SG$900,000 million drag on profitability compared to a SG$4.1 million profit last year. For the half-year, cyber security lost SG$12 million against its SG$9.2 million profit contribution 12 months ago.

"In 1H2019, we also incurred one-off costs of SG$7 million associated with the migration of cable to fibre," StarHub CEO Peter Kaliaropoulos said.

"Excluding cyber security losses and cable migration cost, our profits in 1H2019, would have been SG$108 million compared to SG$120 million (adjusted) in 1H2018, which is lower by 10.1% YoY."

A headcount reduction by the company saw it reduce its cost of staff by 14% compared to last year. In October, the company said it would slash 300 jobs in non-customer facing functions.

The job cuts formed part of the company's transformation initatives, from which it expect to save SG$210 million over three years from 2019.

In line with its first quarter forecast, StarHub expects revenue to decline by up to 2%.

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