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Can StarHub Ltd Ever Grow Again?

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

For the reporting quarter, StarHub reported $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, as summarised below:

Source: Starhub’s earnings presentation

From the above, we can see that mobile services, pay TV service and broadband services all reported declines in sales both for the second-quarter and the first-half of the year.

Yet, StarHub expects to see 2017’s service revenue unchanged compared to 2016.

Source: Starhub’s earnings presentation

With the declines that we see, it is possible for StarHub to grow in the second-half of the year? StarHub’s Chief Executive Officer, Tan Tong Hai, provided his thoughts:

“On the revenue side, yes, so for as of second quarter is down 2%, but you notice that we have four key line of businesses and there’s a steady growth in the enterprise fixed, so we expect enterprise fixed to continue to grow.

Mobility side there’s also opportunity for us to grow as data usage increase, and we intend to launch plans to help us to grow the mobile revenue.”

Chief Marketing Officer, Howie Lau, added that the average data usage per user was 4 GB (gigabytes) in the second-quarter, up from 3.9 GB in the first-quarter and 3.3 GB in the same quarter last year. There’s more, Tan continued:   

“Yes, the pay TV revenue side is facing some downward trend, because of the alternative ways of viewing and of course the problem of piracy, and that’s something that you will see that that is actually dropping, but cable broadband or fibre broadband and all this we will intend to leverage on our dual broadband strategy to ensure that we continue to at least if not maintain the momentum in terms of the cable business or broadband business.

So as a whole, we think that we should be able to still maintain our guidance of around the 2016 revenue number.”

StarHub introduced higher speeds for its traditional cable connection. Lau explained StarHub’s new cable plan:

“ … we’ve also introduced the cable plan, we’ve doubled the speed for cable to 200 [MHz megabits per second], because we see the customers will – different segments of customers will require different types of broadband.”

As investors, we will have to observe whether StarHub’s efforts can bear fruit in the second-half of the year.

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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.