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The Positives And Negatives That Investors Should Know About Starhub Ltd’s Latest Earnings Update

StarHub Ltd (SGX: CC3) is one of the three companies in the telecommunication industry, behind industry leader Singapore Telecommunications Limited (SGX: ZY4) but ahead of M1 Ltd (SGX: B2F).

StarHub has five business segments, namely Mobile, Pay TV, Broadband, Enterprise Fixed and Equipment sales. The telco has recently released its 2018 third-quarter earnings update. In this article, we will look at the positive points and the negative points from its latest result announcement.

The downbeat news

First of all, Starhub’s profit attributable to shareholders was down 12.8% year-on-year to S$57.0 million mainly due to weak performance from its Mobile and PayTV business.

Secondly, the telco’s Mobile and Pay-TV subscriber base shrank year-on-year. To add to that, the Mobile segment’s ARPU (average revenue per user) for post-paid customers declined by $4 to S$44 in its latest quarter. Similarly, the ARPU for Pay-TV segment declined from S$51 a year ago to S$47 in the reporting quarter.

At the same time, EBITDA margin for its Service segment was down from 32.2% a year ago to 28.8% in its latest quarter.

Lastly, Starhub’s net debt position grew from S$632.3 million as of 31 December 2017 to S$728.8 million as of 30 September 2018.

The upbeat news

First of all, StarHub’s overall revenue was up 3.0% year-on-year mainly due to a strong performance from its Enterprise Fixed segment where revenue up by 13.0% year-on-year. The telco’s sales also benefited from higher equipment sales. Growth in StarHub’s Enterprise Fixed segment was driven by higher managed services revenue and acquisitions while growth in equipment sales was driven by higher sales volume of premium handsets and smart home equipment.

Meanwhile, Broadband revenue came in marginally higher in the quarter, driven by a higher number of subscribers. Compared to a year ago, residential broadband subscribers grew from 466,000 to 473,000 while the segement’s ARPU remained flat.

Conclusion:

In sum, Starhub’s Mobile and Pay TV segments continue to face challenges. The telco’s downbeat performance in these two segments was offset by a stronger showing from its Enterprise Fixed business.

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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.