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StarHub 1Q profit dips 12% on lower broadband revenue

Singapore telco's net profit-after-tax drops to S$73.7 million for the quarter ended March 31, 2015, despite clocking higher revenue of S$618 million. It also receives a S$50,000 fine for a five-hour disruption of its pay TV service.
Written by Eileen Yu, Senior Contributing Editor

StarHub has reported a 12.4 percent dip in net profit-after-tax to S$73.7 million (US$55.85 million) for the first quarter, ended March 31, on the back of higher overall revenue at S$617.9 million (US$468.25 million).

The Singapore telco said its overall revenue climbed 8.1 percent year-on-year from higher equipment sales, but service revenue dropped 1 percent to S$540.4 million (US$409.52 million) dragged down primarily from lower broadband uptake.

The company's overall profitability also was affected by higher handset subsidies, with EBITDA dipping by 8.5 percent for the quarter to S$162.1 million (US$122.84 million), it said in a statement Friday evening.

StarHub's mobile customer base dropped from 2.35 million in first-quarter 2014 to 2.15 million in first-quarter 2015, dragged down by a dip in pre-paid subscribers from 1.12 million to 846,000 in this quarter. ARPU (average revenue per user), however, climbed from S$66 to S$68 year-on-year for post-paid subscribers, and S$16 to S$18 for pre-paid customers.

Its market share in Singapore dipped to 26.5 percent for the quarter, from 27.8 percent in the previous year. StarHub is the second-largest of three mobile operators in the country, placed behind Singtel and ahead of M1.

The drop in pre-paid subscriber base pushed down the telco's mobile service revenue by 0.2 percent to S$305.4 million (US$231.43 million), StarHub said, though this was mitigated by higher gains from its post-paid mobile services. This service segment was boosted by higher subscriber base and revenue, as well as higher billings from excess data usage, it added, but noted that voice and roaming usage saw drops as well as inter-connection revenue from carriers.

StarHub's broadband revenue fell 11 percent to S$48 million due to increased price competition that forced down subscription revenue from new and re-contracting subscribers. ARPU for this customer segment clocked at S$33, down from S$39 in the same quarter last year.

For the quarter, it added 22,000 residential broadband subscribers for a total 473,000, while its fiber customer base also grew to 193,000 from 127,000 the year before.

Its pay TV revenue climbed 2 percent to S$96 million (US$72.75 million), boosted by a larger subscriber base that climbed to 545,000, though, ARPU remained stagnant at S$51.

StarHub CEO Tan Tong Hai said in a statement: "This quarter, demand for new smartphones continued to be strong and we took the opportunity to pull ahead our acquisition and retention activities. While this impacted profitability for the quarter, we expect it to contribute positively to our performance subsequently."

The company is projecting its overall 2015 service revenue to climb in the low single-digit figure, with EBITDA margin to be about 32 percent of service revenue.

StarHub said: "Revenue growth will continue to be driven mainly by our fixed and mobile services in the enterprise segment, where we see more upside opportunities. We expect to see increasing adoption of our improved suite of cloud-based and diversified connectivity solutions over our own fixed network infrastructure. As the penetration of NGNBN to commercial premises improves, we are able to reach small and medium businesses and offer them fixed network services over and above the mobile services we have been providing."

The telco last month announced plans to implement software-defined networking (SDN) technology across its network, as part of efforts to better respond to demands from its enterprise customers. It had begun implementation work on its existing core and access networks, with Cisco Systems and Huawei among several vendors involved in the deployment.

Fined for pay TV service disruption

Separately, StarHub's pay TV business unit Singapore Cable Vision (SCV) was slapped with a S$50,000 fine for a service disruption that spanned five hours in September 2013. The downtime affected about 170,000 of the pay TV incumbent's customers across Singapore.

According to industry regulator Media Development Authority (MDA), investigations revealed that a power trip in a switchboard--which powered equipment used for transmitting cable TV signals--caused the glitch.

Affected subscribers suffered signal loss for paid and free-to-air TV channels that were accessed through StarHub's TV cable outlets, reported local newspaper Today.

MDA said in its statement: "The disruption could have been prevented or made less severe if SCV had put in place effective contingency measures to deal with the power surge, such that the backup system would not have been overloaded."

It added that the S$50,000 fine was determined after considering SCV's actions to recover its service and "goodwill measures" it offered subscribers affected by the disruption.

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