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Highlights of the First Quarter Earnings at Starhub Limited

210px-Starhub.svgTelecommunications giant, Starhub Limited (SGX: CC3), posted a 7.7% year-on-year drop in net profit for the first quarter. This was announced during its earnings release on Wednesday. Its rivals in the industry include SingTel (SGX: Z74) and M1 Limited (SGX: B2F).

Revenue for the quarter decreased 1.5% year-on-year to S$571.4 million. This was due to lower service revenue which dipped 0.6% to S$543.8 million and lower sales of equipment which decreased 15.7% to S$27.6 million, as a result of lower quantities of handsets sold this period. Service revenue includes revenue from its mobile, pay TV, broadband and fixed network services.

Mobile continued to be the major contributor at 54% of the total revenue. The revenue for this segment increased 1% to S$306 million, on the back of higher subscription of its post-paid mobile services and an increased mix of subscribers on tiered data subscription plans. On the contrary, pay TV, which contributed 16% of the total revenue, saw its revenue decrease 1% to S$94 million. The lower revenue was due to decline in subscription revenue.

Broadband revenue slumped 14% to S$54 million, mainly due to lower subscription revenue, despite a higher subscriber base. This segment contributed 9% of total revenue. On the other hand, fixed network revenue increased 2% to S$90 million and it contributed to 16% of the total revenue.

Quarterly net profit was at S$84.2 million, while that last year was S$7 million, or 7.7%, higher.

Going forward, Starhub expects its 2014 service revenue to grow in the low single-digit range and it also intends to maintain its annual cash dividend payout of 20 cents per ordinary share for 2014.

The firm is paying out an interim dividend of S$0.05 per ordinary share. This translates to an annual dividend yield of 4.8%, as of the closing price of S$4.17 on the day of results announcement. Starhub is currently trading at 19 times its historical earnings.

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