Demand for Apple iPhone 4S could buoy StarHub's profit

With continuous sales of the iPhone model, StarHub's net profit may come in around S$78m, representing an increase of 13.3%.

A revenue of around S$600m is expected for StarHub, which should represent a 7.4% YoY increase. Updates on how the cable broadband business has been affected by other Retail Service Providers as well as StarHub’s capex plans is eagerly awaited. 

Here's more from OCBC Investment Research:

StarHub Ltd is due to report its 1Q12 results on 04 May after market hours. Based on its historical trend, StarHub’s revenue is expected to come in around S$600m, which should represent 7.4% YoY increase. Assuming that there is still strong lingering demand for the Apple iPhone 4S, where sales could keep cost up, net profit may come in around S$78m, or an increase of 13.3% YoY. Starhub is also expected to maintain its S$0.05/share dividend for the quarter.

Things to watch out for
Besides its mainstay telco business, signs of whether its cable broadband business has been affected by the recent entry of more Retail Service Providers in the NGNBN space will be scrutinized. StarHub should still be able to hold its own against these new entrants, aided by its “hubbing” strategy where subscribers with two or more services enjoy discounts on services. On the Pay TV front, more updates on how the response has been for the upcoming Euro 2012 soccer tournament is awaited as this will also be the first exclusive content that is subject to the new cross carriage ruling.

Capex outlook and dividend policy
Last but not least, StarHub’s capex plans is eagerly anticipated, especially in light of the upcoming 4G spectrum auction. Note that StarHub had previously guided to spend some 11% of its operating revenue as capex. Also keenly watched would be its dividend policy where it is currently paying out $0.20 for the full year. However, if StarHub doesn’t require additional capex spending, the street believes that it can afford to increase the payout amount, especially since the company also has ample room to take on more debt.