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Starhub Ltd’s Q1 2019 Earnings Update: Revenue Grew but Profit Fell

Last Friday, StarHub Ltd (SGX: CC3) released its 2019 first-quarter earnings update. As a quick introduction, StarHub is one of the three companies in the telecommunication industry.

Here, let’s look at 10 important things from the earnings update.

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  1. Revenue for the quarter was up 6% year-on-year to S$597 million. Yet, service revenue declined 1% year-on-year to S$444 million.
  2. Operating profit was down 14% year-on-year to S$72 million.
  3. Quarterly earnings before interest tax depreciation and amortisation (EBITDA) improved 5% year-on-year to S$162 million.
  4. Service segment’s EBITDA margin for the quarter improved from 31.7% last year to 33.7% this quarter.
  5. Profit attributable to investors fell by 14% year-on-year to S$54.0 million.
  6. Free cash flow grew from S$10 million a year ago to S$21 million this quarter.
  7. As of 31 March 2019, net debt stood at S$857 million and the debt-to-EBITDA ratio was 1.49. Net debt and debt-to-EBITDA ratio were S$862 million and 1.52, respectively, as of 31 December 2018.
  8. For the quarter, revenue from sales of equipment and Enterprise business were up by 33% and 14%, respectively, as compared to the same period last year. On the other hand, revenue for Mobile and Pay TV were down by 5% and 12%, respectively, as compared to last year.
  9. Starhub declared a dividend per share of 2.25 cents in the quarter.
  10. The telco also gave the following outlook guidance for 2019:

“Based on the current outlook, we expect the Group’s 2019 service revenue to be stable to a decline of 2% YoY. Group service EBITDA margin is expected to be between 30% to 32% (after SFRS(I) 16 adoption).

In 2019, CAPEX commitment, excluding spectrum payment of S$282.0 million, is expected to be between 11% to 12% of total revenue. The Group intends to pay-out at least 80% of net profit attributable to shareholders (adjusted for one off, non-recurring items), as dividend. For FY2019, the Group intends to pay a dividend of at least 9 cents per ordinary share, at a rate of 2.25 cents per quarter. Any payment above 9 cents would occur in the last quarterly payment.”

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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.