Starhub

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StarHub Q1 net soars 62% to $69m

By WINSTON CHAI


THE popularity of smartphones has turned from bane to boom for StarHub in one year with the operator's first-quarter net profit soaring 62.1 per cent to $69.1 million, from $42.7 million a year earlier.


Earnings per share for the three months ended March 31 came in at 4.03 cents, up from 2.49 cents last year. Q1 sales stayed flat at $558.5 million.

Last year, the operator's bottom line took a heavy blow in Q1 due to the higher subsidies it had to incur for handsets such as the Apple iPhone.

This time around, the company's operating expenses fell 5.7 per cent year-on-year to $470.8 million.

This is largely due to a 13 per cent reduction in its cost of sales to $216.4 million as smartphone sales have started to wane in light of growing saturation. According to StarHub, 70 per cent of its post-paid mobile customers are already using these newfangled handsets.

With the smartphone drag lifted, the operator's mobile revenue grew 3.3 per cent to $295.6 million. Its cellular subscriber base remained unchanged at 2.15 million.

However, the cellular units of StarHub and its rivals could be adversely impacted from the current quarter onwards as the Singapore and Malaysian authorities have agreed to slash auto-roaming costs 20 per cent from this month and a further 10 per cent next year.

Malaysia is one of the top roaming destinations for local operators.

Some analysts expect local telcos to be hit harder in comparison to their Malaysian counterparts as a larger proportion of their revenue comes from auto-roaming tariffs.

'Our revenue will come down but our costs will also come down accordingly. We're hoping lower prices means they (customers) will be keener to roam. It might have a positive impact overall,' StarHub CEO Neil Montefiore said in a conference call yesterday.

Besides the mobile segment, two of StarHub's three remaining business lines also turned in a better Q1 scorecard.

Its broadband revenue edged up 0.6 per cent to $59.9 million. Sales from fixed network services rose 4.6 per cent year-on-year to $83.6 million, helped by the take-up of the so-called Next-Gen NBN (Nationwide Broadband Network) services on Singapore's new fibre-optic Internet backbone.

Singapore Telecommunications claims it has attracted half of the estimated 16,000 customers who have signed up for Next-Gen NBN packages, while M1 said its market share is around one-third.

StarHub declined to reveal the take-up for fibre-optic services but Mr Montefiore said it has been 'slower than expected'.

StarHub's pay-TV sales dipped 10 per cent in the first quarter to $92 million after it halved its sports group pricing following the loss of its Barclays Premier League broadcast rights to SingTel.

After taking a slight dip initially, StarHub's cable television subscriber base grew by 4,000 users year-on-year to 542,000 in Q1.

'We were focusing on the lower-income groups. That strategy has worked very well,' StarHub's chief operating officer Tan Tong Hai explained.

The operator has proposed an interim dividend of five cents per share for its first-quarter performance, unchanged from last year.

StarHub shares closed four cents lower yesterday at $2.80 before its earnings were released.