StarHub – BT

StarHub Q3 earnings fall 0.2% to $81.3m

Telco suffers first quarterly profit decline since its listing 3 years ago

STARHUB has posted lower net profits of $81.3 million for the third quarter ended Sept 30 – its first quarterly decline since the telco’s listing in October 2004 – amid intense competition and higher content costs for its football channel.

Singapore’s second-largest listed telco, StarHub said net profit fell 0.2 per cent to $81.3 million while earnings per share rose to 4.78 cents from 3.97 cents a year ago.

Revenue grew 11.4 per cent to $513.1 million, from $460.6 million a year ago but cost of sales rose a faster 29 per cent per cent, driving total operating expenses 13.4 per cent higher to $405.4 million.

StarHub chief executive Terry Klontz said the quarter’s higher cost was due to its cable TV business amortisation of costs for the new season of Barclay Premier League programming rights.

But the price increase for the sports package does not kick in until this quarter, and even then for only two months, he said.

The full impact of the higher prices will be felt next year. For the nine months, net profit rose 6.2 per cent to $232 million.

All four businesses reported growth in revenues.

Although StarHub’s Q3 mobile phone business grew its revenue 13.9 per cent to $266.2 million year on year and continues to be the firm’s largest earner, market share has slipped.

StarHub managed to increase its number of mobile phone subscribers by 50,000 to 1.68 million during the quarter but market share slipped to 31.8 per cent from its peak 33.2 per cent a year ago.

Smaller rival Mobile-One, which posted third-quarter results last month, added 58,000 new customers to bring its total customer base to 1.467 million.

As for Singapore Telecommunications, which will report second-quarter results next week, it said in August during its first-quarter presentation that total number of mobile subscribers rose to 1.92 million as it added 124,000 new customers, giving the company a 39 per cent market share, up one percentage point from a year ago.

StarHub spokeswoman Jeannie Ong said the firm does not have a market share target. ‘We are focused on revenue,’ said Ms Ong.

Broadband registered 11.7 per cent Q3 growth to $62 million while Cable TV revenue was up 8.5 per cent to $85.8 million.

Fixed network business rose 3.9 per cent to $73.4 million.

StarHub also revised its 2007 revenue growth guidance upwards to about 11 per cent, from high single digit.

It expects margin on blended earnings before interest, tax, depreciation and amortisation (Ebitda) to remain around 34 per cent.

Full-year cash capital expenditure, as a ratio of operating revenue, is expected to be about 12 per cent, against earlier expectations of not more than 14 per cent.

The company declared a dividend of four cents and confirmed that it will pay a minimum annual cash dividend for the full financial year 2007 of 15.5 cents per ordinary share.

This means a dividend payment of four cents per quarter for the remainder of the year.

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