StarHub – BT
StarHub Q1 profit up 3% at $82.5m
But customers now paring mobile phone usage, opting for cheaper Net plans
STARHUB’S net income for the first quarter rose 3 per cent to $82.5 million on the back of a tax gain as well as higher revenue from its fixed network and pay-TV businesses.
However, the firm’s mobile and broadband services are starting to feel the pinch from the economic crunch with some customers already reining in their mobile phone usage and migrating to lower-end Internet plans.
‘Two to three years ago, this (result) would have been unsatisfactory. Today, we are glad that operations have been relatively stable,’ said StarHub chief executive Terry Clontz.
Diluted earnings per share for the period ended March 31 grew 3 per cent from last year to 4.8 cents, while Q1 operating revenue slid to $530.6 million, down marginally by 0.8 per cent from 2008.
Singapore’s second-largest operator has proposed an interim dividend of 4.5 cents per share, unchanged from last year. Despite the tough economic outlook, StarHub expects to keep its full-year cash payout at 18 cents or more.
The firm’s Q1 performance was partly helped by a tax gain of $0.8 million due to a reduction in Singapore’s corporate tax rate. Excluding this tax credit, the firm’s Q1 net income would have been 2 per cent higher at $81.7 million.
On the business front, StarHub’s fixed network business registered the biggest improvement in Q1 with revenue rising 9 per cent from last year to $79.1 million. This growth was largely due to a 13.4 per cent increase in sales from wholesaling bandwidth as well as providing connectivity services to corporate customers in some 800 buildings in the central business district.
When Singapore’s new fibre-optic broadband network becomes operational in 2013, StarHub has the opportunity to break SingTel’s ‘monopoly’ by extending its corporate reach into more office locations, Mr Clontz told reporters in a conference call yesterday.
Besides its fixed network segment, the company’s pay-TV business also registered an improvement in Q1, with revenue rising 5 per cent to $102 million.
StarHub added 3,000 new cable television customers during the quarter to bring its total pay-TV base to 527,000, or around 46.1 per cent of all local households.
However, sales from the operator’s mobile business, which accounts for nearly half its total sales, slid 3.1 per cent from last year to $264.7 million.
This was attributed to a reduction in post-paid subscriber revenue with some users cutting back their voice calls as well as IDD and cellular roaming usage amid the downturn.
The firm added 16,000 mobile customers to bring its total cellular subscriber base to nearly 1.82 million at the end of Q1.
Revenue from StarHub’s broadband business also fell in Q1, dropping 2.6 per cent to $62.4 million.
This is because more customers are opting for upfront subscription discounts instead of free gifts due to the ongoing recession.
In addition, there is also some migration towards lower-speed broadband plans during the quarter, explained StarHub’s chief operating officer Tan Tong Hai. At the end of Q1, the firm’s cash and cash equivalents stood at $244.7 million while borrowings totalled $924.4 million.
For the full-year, StarHub expects revenue from its telco and Internet services to come in at around $2.03 billion, unchanged from last year.
Ebita margin is forecasted to be roughly 32 per cent of this number, while capital expenditure will be less than 11 per cent of total operating revenue in 2009.
StarHub shares closed 2.1 per cent higher at $1.92 before it released its Q1 results.