StarHub – BT

StarHub Q3 net profit dips to $82m

Higher phone subsidies continue to erode telco’s bottom line

HIGHER phone subsidies continue to dent StarHub’s bottom line but the company managed to narrow the margin of decline for the third quarter following a sharp reduction in pay-television content cost.

The operator’s net profit for the three months ended Sept 30 stood at $82 million, down 3.7 per cent from $85.2 million a year ago.

For the first and second quarters of 2010, StarHub’s net profit had tumbled 48 per cent and 25 per cent respectively due to a combination of heavy phone subsidies for handsets such as the Apple iPhone, as well as the premium it paid for the World Cup broadcast in June.

Q3 earnings per share came to 4.78 cents, down from 4.97 cents a year ago.

Operating revenue for the period under review rose 2.8 per cent to $552.3 million, from $537.1 million. But operating expenses rose 4.6 per cent to $445.3 million, largely due to higher staff costs.

Q3 sales rose across half of StarHub’s four business segments.

Its mobile arm, which accounted for 54 per cent of total revenue, notched a sales rise of 7.7 per cent to $298.3 million.

However, the increase was overshadowed by a 17 per cent increase in the cost of equipment sold to $61.4 million as smart phones continue to gain favour among Singaporeans.

These handsets, which typically come with higher operator subsidies, now account for more than half of the devices on its network, according to StarHub CEO Neil Montefiore.

The company added 21,500 mobile customers in the quarter to take its tally to 2.1 million.

StarHub’s fixed network revenue rose 6.7 per cent to $85.1 million, while broadband revenue fell marginally by 0.8 per cent to $58.3 million for Q3.

The company attracted 4,000 new broadband subscribers in the period to take its customer base to 412,000.

However, the average revenue per user for this segment fell $3 year-on- year to $47 as more users opted for lower-end Internet plans and subscription discounts for taking up multiple StarHub services.

StarHub had launched new fibre-optic Internet packages in September but the foray is not expected to make a major revenue contribution this year as the new government-backed network is still being progressively rolled out, Mr Montefiore said.

‘The growth is mainly coming from lower-end (cable broadband) users,’ he said in a conference call yesterday.

StarHub’s pay-television arm turned in the worst scorecard, with Q3 sales sliding 7.9 per cent to $92.4 million.

The company gained 2,000 new pay-TV subscribers in the period under review from last year but its customer base fell by 4,000 users on a sequential basis after the curtain call on its World Cup and Barclays Premier League (BPL) broadcast.

‘The (customer) loss is much lesser than we expected,’ said StarHub chief operating officer Tan Tong Hai.

Last year, the operator had estimated that up to 10 per cent of its cable television customers, or some 50,000 subscribers, could jump ship following the loss of its BPL rights to archrival Singapore Telecommunications.

On a nine-month basis, StarHub’s net income fell 25.5 per cent to $182.7 million, while revenue rose 4.9 per cent to $1.7 billion.

The counter closed six cents higher at $2.80 yesterday before its Q3 earnings were released.

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