StarHub – BT

StarHub posts 8.4% rise in Q4 net profit as mobile business revs up

But acquisition expenses of iPhones and other smartphones puts a drag on full-year profit

STARHUB posted an 8.4 per cent year-on-year rise in fourth quarter net profit to $80.4 million as revenue for the three months ended Dec 31, 2010, increased 1.6 per cent to $559 million.

Its main mobile business saw a 7.9 per cent climb in Q4 revenue to $303 million. Also contributing to its better results was an ‘other income’ of $3 million, which came from government grants for the NBN (Nationwide Broadband Network) project.

Earnings per share for the quarter came to 4.69 cents, up from Q4 2009’s 4.33 cents. The group proposed a final dividend of five cents a share, bringing the full-year dividend payout to 20 cents. StarHub CEO Neil Montefiore said he expects the cash dividend payout to be maintained at 5 cents per share per quarter.

Full-year revenue increased 4 per cent to $2.24 billion. Higher cost of sales and expenses, however, pulled 2010 net profit down by 18 per cent to $263 million.

Kwek Buck Chye, StarHub’s chief financial officer, said acquisition expenses of high-end handsets such as the Apple iPhone and other smartphones was a significant cost.

‘2010 bears the brunt of a full year’s investment in iPhones,’ he said.

StarHub began carrying the iPhone in December 2009. The increased use of smartphones and mobile data helped push up ARPU (average revenue per user) and revenues for StarHub’s mobile business, which contributes 53 per cent of its overall revenue.

Mobile revenue over the year grew 8 per cent to $1.18 billion, with post-paid services revenue rising 10 per cent to hit $917 million for the year. Pre-paid services revenue also grew 2 per cent over the year to hit $264 million.

StarHub’s total mobile customer base saw an addition of 227,000 customers over the year, an increase of 12 per cent. Post-paid ARPU rose $2 in the last quarter of 2010 to reach $74.

Mr Montefiore said this rise, together with a drop in revenue from voice services, was due to the trend of using data services more than that of cellular voice. Examples of such data services include people using voice over Internet protocol (VoIP) services, as well as data-based text messaging services and social networks.

StarHub’s pay-TV business, which contributed 18 per cent to its revenue, saw revenue drop by 2.5 per cent over the year to $395 million. For the fourth quarter of 2010, it decreased 11 per cent over 2009’s fourth quarter to $91.8 million.

Tan Tong Hai, StarHub’s chief operating officer, said this was a result of the revision of monthly subscription prices of its sports channel group.

In October 2009, StarHub lost the exclusive broadcast rights to the Barclays Premier League (BPL) in a fierce bidding war with rival, SingTel. Mr Montefiore acknowledged the impact of the BPL loss: ‘There is a gap in our sports (offering) without the BPL but we are announcing new sports content.’

Still, its pay-TV subscriber base held steady at 538,000 households in 2010’s fourth quarter, just 1,000 households lower than 2009’s close.

There were fears of SingTel wresting customers away from StarHub with the BPL win.

On SingTel’s end, the BPL has multiplied its mio TV base by about five times over the past two years. It had a base of 59,000 customers at end 2008, a number which swelled to 245,000 by September 2010.

StarHub’s shares lost one cent to close at $2.61 yesterday.

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