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Dialling up Starhub’s First Quarter Results

210px-Starhub.svgSingapore’s second largest telecommunications company Starhub (SGX: CC3) released its first quarter results yesterday evening and managed to dial up a quarterly profit of S$91.2m, a 3.2% increase over last year’s S$88.4m. The company’s top-line contracted 1.8% year-on-year from S$590.9m to S$580.1m.

Starhub reports five different revenue sources: Mobile, Pay TV, Broadband, Fixed Network Services and Sale of Equipment. They make up 52%, 16.3%, 10.8%, 15.2% and 5.7% of the company’s revenue respectively in the first quarter of this year.

For the quarter, revenue from Mobile slipped slightly by 1.5% from S$306.6m to S$301.9m. Since it is the most important revenue source for Starhub, let’s take a closer look at how it fared.

Revenue from Mobile’s split into two sources: Post-paid and Pre-paid. Post-paid saw a 4.3% year-on-year increase in customers to 1.11m but its average revenue per user (ARPU) dropped by 1.4% to S$68 per month. The net-result was a 1.8% slip in Post-paid revenue from S$245.5m a year ago to S$241m. Revenue from Pre-paid also declined slightly by 0.2% from S$61.1m to S$60.9m as a result of a falling customer-base (from 1.13m last year to 1.104m) and an ARPU that’s unchanged from last year’s $19.

Moving on to the rest of the Starhub’s revenue sources, we have Pay TV, which decreased by 1.1% for the quarter from S$95.7m a year ago to S$94.7m. Subscription revenues from customers increased but couldn’t make up for a decline in advertising revenue.

Broadband’s quarterly revenue grew by 1.7% year-on-year from S$61.4m to S$62.4m on the back of a higher subscriber base of 444,000, a 1% increase from last year’s 439,500. That helped compensate for a slightly lower ARPU of S$45 compared to last year’s S$46.

Fixed Network Services’ revenue, which is made up of Data & Internet and Voice Services, moved up 3.9% from last year’s S$85m to S$88.3m. The increase was led by an 11.2% growth in Voice Services’ revenue from S$14.7m a year ago to S$16.3m. Data & Internet’s sales saw an increase of 2.4% from S$70.3m to S$72m, but its “domestic leased circuits business continues to see lower revenue from pricing pressure and increased competition.”

Lastly, we have the Sale of Equipment unit, which slowed down the most – quarterly revenue decreased by 22.5% from S$42.2m to S$32.8m. Lower prices and a smaller number of products sold were the main culprits here.

On the quarter’s performance, Starhub’s Chief Executive Officer Mr Tan Tong Hai added, “We are happy to report a 3% growth in net profit after tax year-on-year, despite intense competition in the market place.

In the Mobile space, we have gained traction with over 75% LTE nation-wide coverage and 4G customer take-up in excess of 270,000 subscribers. The MDA‟s decision to make BPL subject to the cross-carriage measure is a good outcome for Singapore viewers and we will seek to comply with MDA‟s direction and the Media Code. “

Going forward, the company expects low single-digit year-on-year growth in revenue. It also expects its earnings before interest, taxes, depreciation & amortisation (EBITDA) margin to dial in at 31%. About 13% of Starhub’s annual revenue for 2013 has been earmarked for capital expenditures. Shareholders should expect to receive annual dividends of S$0.20 per share for this year, unchanged from last year’s full year pay-out.

For the first quarter, the company has declared a dividend of S$0.05 per share, the same as last year’s. At Thursday’s closing price of S$4.72, it would represent a Price-Earnings ratio of 22 and a dividend yield of $4.2% based on 2013’s expected full-year dividends.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Chong Ser Jing doesn’t own shares in any companies mentioned.