StarHub could raise its FY14 dividend: Maybank

3 factors pushing for higher DPS.

"Given lower spectrum cost, extra breathing room given by EPL cross-carriage and low net debt/EBITDA of 0.4x, there is scope for StarHub to raise its FY14 dividend from the current SGD0.20/share promised for FY13," assessed Maybank Kim Eng in its latest company results preview for the telco.

Maybank said that there is a potential increase in FY14 dividend now that cashflow uncertainties viz spectrum auction have cleared up.

Also, the government’s rejection of SingTel’s appeal for EPL not to be subjected to the cross-carriage rule, and lower-than-expected 4G spectrum auction cost could both convince StarHub to be more receptive toward paying higher dividends, it said.

Based on the research firm's forecasts, StarHub should generate FCF per share of SGD0.24-0.25 a share in FY14-15, enough to fund a slightly higher DPS.

"In the past (2007-2011), they have tended to raise dividends in increments of 1-2 cents. StarHub will only announce its future dividend early next year after full year results," said Maybank.