StarHub Ltd’s Second-Quarter Earnings Briefing: Mobile Woes Continue

StarHub Ltd (SGX: CC3) reported its second-quarter results earlier this month.

For the reporting quarter, StarHub announced that it brought in $542.6 million in service revenue, a figure that was 2% lower compared to a year ago. StarHub derives its service revenue from four business segments: mobile, pay TV, enterprise fixed and broadband. Three out of four segments reported sales declines.

Let’s take a closer look at StarHub’s mobile business segment.

A bird’s eye view

Source: Starhub’s earnings presentation

StarHub’s mobile revenue was down 0.9% year-on-year for the second-quarter. The mobile segment posted $307.2 million in sales and accounted for 55.7% of StarHub’s topline. Mobile is by far the most important segment of StarHub’s revenue base.

The mobile segment, though, is under pressure from a few areas.

Ups and downs

Source: Starhub’s earnings presentation

For 2017’s second-quarter, StarHub recorded 905,000 pre-paid subscribers and 1.385 million post-paid subscribers. In the prior quarter, there were 898,000 pre-paid subscribers and 1.392 million post-paid subscribers. A year ago, there were 872,000 pre-paid subscribers and 1.364 post-paid subscribers.

On a quarter-on-quarter basis, there were gains in the pre-paid side, but a loss at the post-paid subscriber user. Chief Marketing Officer, Howie Lau, commented that the overall mobile penetration rate was “about 150%.”

Let’s look at the average revenue per user (ARPU) next.

Source: Starhub’s earnings presentation

StarHub’s post-paid ARPU is fell from $71 in the second-quarter of 2016 to $70 in the second-quarter in 2017. On a quarter-on-quarter comparison,  the ARPU figure rose from $67 in the prior quarter to $70 in the reporting quarter. Lau explained:

“You are right, we do see a good take-up on some of the VASes (value-added services) as well as data usage, which has contributed to the quarter-on-quarter increase on the ARPU.

In terms of the outlook, obviously we will continue to monitor the consumer patterns and what they want, so that we are able to keep introducing the right plans.”

However, pre-paid ARPU has shown a steady decline from $16 a year ago to $15 in the second-quarter of 2017.  

The mobile services segment has the highest profit margins  among the four business segments. We should continue watching developments as it unfolds.

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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 Chin Hui Leong doesn’t own shares in any companies mentioned.