StarHub Ltd’s Revenue And Profit Fall In 2018’s First Quarter

Last week, StarHub Ltd (SGX: CC3), which is an easily recognisable company in Singapore given that it’s our island nation’s second largest operational telco, released its 2018 first quarter earnings update.

Here are nine key highlights from StarHub’s latest results:

1. Revenue for the quarter was down 4.7% year-on-year to S$561.0 million. The important service revenue, which is recurring in nature, was down 1.4% year-on-year to S$450.8 million.

2. EBITDA (earnings before interest, taxes, depreciation, and amortisation) declined by 4.8% to S$152.2 million.

3. The service segment’s EBITDA margin fell from 32.8% a year ago to 32.1%.

4. Profit attributable to shareholders fell harder by 14.9% to S$61.5 million.

5. Free cash flow plunged by 91.5% year-on-year to S$9.9 million on the back of a halving of StarHub’s operating cash flow to S$77.9 million, and a doubling of its capital expenditure to S$33.7 million.

6. As of 31 March 2018, StarHub’s net debt stood at S$684.6 million and its net debt to EBITDA ratio stood at 1.09. The telco’s balance sheet had weakened sequentially; at the end of 2017, StarHub’s net debt and net debt to EBITDA ratio were S$632.3 million and 1.00, respectively, as of 31 December 2017.

7. For 2018’s first quarter, revenue for the Broadband and Enterprise Fixed segments were up by 0.6% (to S$47.5 million) and 18.0% (S$117.5 million), respectively, compared to a year ago. On the other hand, revenue for Mobile and Pay TV were down by 7.1% (to S$205.1 million) and 10.0% (S$80.7 million) year-on-year.

8. StarHub proposed a dividend of S$0.04 per share for the reporting quarter, unchanged from a year ago. The dividend was higher than StarHub’s earnings per share of S$0.034 for the same quarter.

9. In its earnings update, StarHub gave the following comment on its outlook:

“Based on the current outlook, we expect our guidance on our Group’s 2018 service revenue to be 1% to 3% lower YoY.  Group’s service EBITDA margin is expected to be between 27% to 29% after the adoption of SFRS(I) 15. We chose service EBITDA margin as it excludes margin on equipment sales, which better reflects the margin of our core business. In 2018, CAPEX payment, excluding spectrum payment of S$282.0 million and building payment of S$31.6 million, is expected to be 11% of total revenue. We intend to pay a quarterly cash dividend of 4 cents per ordinary share for FY2018.”

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