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Starhub Ends 2013 with 20 Cents Per Share Dividend

Starhub (SGX: CC3), one of the 30 components that make up the Straits Times Index (SGX: ^STI), announced its full year earnings yesterday evening. As one of the 3 main telecommunication companies in Singapore, Starhub categorises its businesses into 4 main segments; Mobile, Pay TV, Broadband and Fixed Network.

Performances

Total revenue for the year dropped by 3% to S$2.36 billion from 2012, mainly due to lower equipment sales. The company’s operating margin was relatively stable at 17.5%. Meanwhile, ‘Other’ income for Starhub had jumped 87% year-on-year to S$49.9 million on the back of a higher take-up rate in its Next Gen NBN services.

All told, Starhub had ended 2013 with a net profit of S$371 million, up 3% from 2012, mainly due to its stable operating margins and much higher ‘other’ income.

But while there was an increase in profits, Starhub’s free cash flow had dived 30% lower from S$416.8 million to S$291.9 million mainly due to an increase in capital expenditures related to its new cable TV network transmission centre.

Mobile

Starhub’s mobile revenue is split between post-paid and pre-paid customers. Its customer base for pre-paid and post-paid is roughly even. However, in terms of revenue, post-paid customers contributed the lion’s share with S$999.5million, up 1.9% from FY2012. This is mainly due to an increase in its post-paid customer base. Pre-paid customers, on the hand, contributed only S$235.9 million in revenue, down 3% from a year ago. This is mainly due to the decrease in average monthly spending by Starhub’s pre-paid customers.

Pay TV

Pay TV had a more challenging year, with revenue down 3% since last year as they lost roughly 2000 customers in 2013.

Broadband

Similar to Pay TV, broadband services saw revenue dip by 4% this year to S$240million as the average revenue per user decreased by 4% in 2013.

Fixed Network

Fixed network service is the best performing segment with revenue growth of 3% to S$368.3 million.

Foolish Summary

In Starhub’s earnings release, the company’s chief executive Mr. Tan Tong Hai reiterated that the commpany’s using ‘Hubbing’ – the bundling of various services for customers – as its main strategy.

Although Starhub’s balance sheet continues to be highly geared despite shareholders’ equity almost doubling to S$82.7million, the company was able to end the year with the all-important S$0.20 per share dividend.

With Thursday’s closing price of S$4.23, that gives Starhub a historical yield of around 4.7%, ensuring the company remains as one of the highest yielding companies within the Straits Times Index. Management indicated that the company “intend[s] to maintain” its annual dividend at the S$0.20 per share mark for 2014.

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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 Stanley Lim doesn’t own shares in any companies mentioned.