StarHub still leaning on enterprise for growth

StarHub net profit fell by 16 percent to SG$185 million, as the carrier increasingly relies on its enterprise segment for revenue growth as mobile and pay TV drop.

StarHub has reported its financial results for the first nine months of the year, with the Singaporean telecommunications carrier losing service revenue across almost every segment except enterprise.

In total for the nine months ended September 30, StarHub reported revenue up 1 percent to SG$1.7 billion, and service revenue down 1 percent to SG$1.4 billion.

Earnings before interest, tax, depreciation, and amortisation (EBITDA) was down 9 percent to SG$456 million, while net profit was down 16 percent to SG$185 million.

In reporting the Q3 results, new StarHub CEO Peter Kaliaropoulos described "ever-increasing competitive pressures".

Enterprise fixed services was up by 17.6 percent to SG$364.6 million, StarHub said. Across the segment, data and internet revenue fell by 0.6 percent and voice by 23 percent, while managed services jumped by 117.8 percent.

"The growth in managed services revenue was largely contributed by higher demand for cybersecurity, cloud, cryptographic, and digital security solutions," StarHub said, pointing to revenue from its cybersecurity-focused acquisitions of Accel, now known as Ensign InfoSecurity, and D'Crypt.

Across mobile services, meanwhile, revenue was down by 6.3 percent to SG$630 million, as the carrier's post-paid customer base increased to 1.39 million and prepaid customers fell to 836,000 for a total mobile customer base of just over 2.2 million -- 26.7 percent market share in Singapore.

Post-paid average revenue per user (ARPU) decreased from SG$48 to SG$44 during the last year, while prepaid ARPU remained SG$14 per month.

Pay TV services revenue was down 9.6 percent to SG$240 million as its customer base shrank to a total of 423,000, with ARPU decreasing from SG$51 to SG$47 per month.

"Pay TV business continues to experience loss of customers to alternative content and packages. We are addressing these challenges including the management of operating expenses," Kaliaropoulos added, pointing to the provider's new StarHub Go Streaming Box running Android TV Oreo.

Revenue from broadband services remained stagnant, at SG$140 million.

StarHub's broadband and enterprise fixed customer base grew by 7,000 people, with ARPU remaining stable at SG$32 per month. As of September 30, StarHub had 473,000 residential broadband customers and 403,000 fibre broadband customers.

Lastly, sale of equipment was up by 9.3 percent to SG$367.5 million, which StarHub said was primarily due to sales of smart home equipment.

"3Q has been a particularly active period for StarHub; we formed Ensign InfoSecurity, a joint venture company with Temasek Holdings to address the growing opportunities for complex cybersecurity solutions in Singapore and other markets," Kaliaropoulos said.

"We also launched our strategic transformation plan to optimise operational efficiencies, simplify products, and drive digitalisation to improve customers' experience."

StarHub had last month unveiled plans to axe 300 jobs as part of its strategic transformation, with the redundancies to impact non-customer-facing roles.

The transformation is expected to yield SG$210 million in savings over the three years from 2019 as it also looks to make savings across optimised spending in network and systems repairs and maintenance; leasing costs; procurement activities; and sales and distribution expenses.

"The intense competitive ferocity right across the market, new entrants, lower voice revenues, thinning margins for fixed broadband services, high content costs for pay TV operations, and high market penetration for mobile and fixed services have necessitated efficiency optimisation initiatives as part of the strategic transformation plan," Kaliaropoulos explained in October.

"Technological innovation and competition are redefining how we deliver services to our customers, and we at StarHub need to transform our operating model, otherwise we will face greater risks in the future."

StarHub added that it would continue expanding its workforce across cybersecurity and wireless and fibre services, however.

In announcing the company's H1 results in August, Kaliaropoulos also pointed to StarHub's incoming 5G network, saying work on its 5G pilot is "under way to explore new enterprise solutions".

"StarHub has clocked Singapore's fastest 3G and 4G speeds, according to OpenSignal. Notwithstanding this success, we know exploring innovation in 5G services is also crucial," he said.

During the year, StarHub activated what it called the "first commercially ready" gigabit-speed LTE mobile network in Singapore, as well as enabling narrowband Internet of Things (NB-IoT) capabilities.

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