The 5 Ways StarHub Ltd Makes Its Money

StarHub Ltd (SGX: CC3) is one of the three big telecommunications companies in Singapore. It sits in between the leader Singapore Telecommunications Limited (SGX: Z74) and the smaller M1 Ltd (SGX: B2F).

As investors, we need to understand a company before we invest in it. As the legendary investor Warren Buffett once wrote, ”We look for companies that have a) a business we understand; b) favourable long-term economics; c) able and trustworthy management; and d) a sensible price tag.”

Buffett’s quote underscores the importance of understanding the business that a company is in. For any investor who is interested in StarHub, here’s a breakdown of the company’s revenue sources.

StarHub’s revenue anaysis

The main businesses of StarHub can be grouped into five main components, namely, Mobile, Enterprise Fixed (formerly known as fixed network), Broadband, Pay TV, and Sale of Equipment.

Here’s how each segment shakes out in terms of their contribution to StarHub’s total revenue of S$2.44 billion in 2015:

StarHub segment revenue table - Lawrence
Source: StarHub 2015 annual report

Mobile is the most important segment, accounting for more than half of StarHub’s total revenue. This segment is where StarHub provides mobile services to its custsomers.

Enterprise Fixed and Pay TV have an equal share (16% each) of StarHub’s revenue in 2015.

Enterprise Fixed is where StarHub serves enterprise customers, with a portfolio of Information and Communications Technology (ICT) services and solutions. It includes hosting solutions and data analytics. Meanwhile, Pay TV is simply subscription cable TV packages that StarHub offers to consumers.

Broadband is one of the smaller segments and it is where StarHub provides internet connectivity for subscribers. The last is Sale of Equipment and it deals with the sale of mobile handsets.

So as you can see, the bulk of StarHub’s revenue is from consumers. That said, the Enterprise Fixed segment is growing and actually became the second-largest revenue contributor for StarHub in the second-quarter of 2016.

There are quite a few moving pieces with StarHub’s business. Investors who can understand the different revenue segments would be able to make more-informed investing decisions.

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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 Lawrence Nga doesn’t own shares in any companies mentioned.