3 Things Investors Should Know About StarHub Ltd’s 2017 Earnings

StarHub Ltd (SGX: CC3) is one of the three major telecommunication companies in Singapore. Last week, it announced its financial results for the full year ended 31 December 2017. Let’s look at the main aspects of the announcement here.

Show me the money

Total revenue for the year was at S$2.4 billion, stable as compared to a year ago. However, service revenue – which comprises of revenues from mobile, pay TV, broadband and enterprise fixed services – declined 1% year-on-year to S$2.2 billion.

Mobile service revenue, contributing to 49.9% of total revenue, fell 1.5% to slightly below S$1.2 billion. The decline was on the back of lower voice, IDD (international direct dialling) and roaming usages, lower plan subscription and interconnect revenues. This was partly offset by higher mobile VAS (value-added services) subscription, and higher data and Enterprise SMS (short message service) usage.

Of the service revenue, only enterprise fixed service saw revenue growth for the year. This business segment saw its top-line go up by 9.2% to S$436.9 million.

Meanwhile, EBITDA (earnings before interest, taxes, depreciation and amortisation) fell 11% to S$613.9 million due to partly to “one-off provisions made for certain staff benefits to rationalise and retain talent in recognition of the business challenges and operating conditions, and for a leasing contract related to the cable network”.

Net profit attributable to shareholders tumbled 27.1% to S$249 million.

Source: StarHub 2017 Earnings Presentation

As at 31 December 2017, StarHub had S$345.2 million in cash and cash equivalents, and S$977.5 million in total debt. This gives a net debt position of S$632.3 million, which is an improvement from 2016’s net debt of S$702.3 million.

Despite the fall in net profit, free cash flow (which is net cash from operating activities less purchase of property, plant and equipment and intangible assets) grew 20.3% to S$221.3 million.


A final dividend of 4.0 Singapore cents per share has been proposed, bringing the total dividend for 2017 to 16.0 cents per share, down from 20.0 cents per share in 2016. StarHub intends to maintain a quarterly cash dividend of 4.0 cents per share in 2018.

What the future holds?

As for its 2018 outlook, the telco said that it expects service revenue to be 1-3% lower year-on-year.

Tan Tong Hai, chief executive of StarHub, added:

“In 2018, we will be taking our customer-centric approach a step further by adopting a higher level of artificial intelligence to anticipate our customers’ needs and recommend new services to them. The year will also usher in changes to the competitive landscape and we are ready to seize opportunities offered by the market.”

There will be increased competition in the already-crowded telco space with the entry of a fourth service provider, Australia-based TPG Telecom. The company plans to launch its mobile network with nationwide coverage by end-2018 and capture at least 5% of the market share. It would be interesting to watch how the telco industry evolves with the entry of the new player.

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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 Sudhan P doesn’t own shares in any companies mentioned.