The Good And The Bad: What Investors Should Know About StarHub Ltd’s Latest First Quarter Earnings

StarHub Ltd (SGX: CC3) is one of the three telcos that are operational in Singapore right now.

Last week, StarHub released its 2017 first quarter earnings. There are both positive and negative takeaways from the company’s latest earnings that investors may want to learn about. Let’s take a look, starting with an overview of the numbers:

1. The overall numbers

Here’s a table showing some important items from StarHub’s income statement for the first quarters of 2017 and 2016:

Source: StarHub 2017 first quarter earnings release

During the first quarter of 2017, StarHub enjoyed marginal revenue growth. But because expenses grew at a faster rate, its net profit actually fell by 21% year-on-year.

StaHub has five business segments, namely, Mobile services, Pay TV services, Broadband services, Enterprise Fixed services, and Sales of Equipment. Of the five, Mobile services and Pay TV services saw their revenues fall.

2. The negatives

Firstly, the average revenue per user (ARPU) declined for both the pre-paid and post-paid sub-segments within the Mobile services segment.

Secondly, growth in StarHub’s overall expenses outpaced revenue, as mentioned earlier, leading to a lower net profit margin.

Thirdly, StarHub’s balance sheet has weakened from a year ago with its net debt climbing from S$417 million to S$586 million.

3. The positives

Firstly, the Mobile services segment saw year-on-year growth in subscriber numbers, driven by increases in both the pre-paid and post-paid sub-segments. As a result, StarHub’s mobile market share grew from 26.7% a year ago to 27.5%.

Secondly, the Enterprise Fixed services segment grew its revenue by 2.9% primarily due to higher sales from managed and analytics services.

Thirdly, StarHub’s free cash flow for the first quarter of 2017 was higher, up from S$90 million in the first quarter of 2016 to S$116.5 million.

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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.