StarHub profits down 36.1% to $39.5m in Q2

Lower revenues from mobile, pay TV, broadband, and equipment sales hit earnings.

StarHub’s profits for the second quarter of 2019 crashed 36.1% to $39.5m from $61.7m in the same period last year. According to its financial statement, revenue was also down 7.4% to $552.8m from $597.3m last year.

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The lower revenue was mainly due to lower revenues from Mobile, Pay TV, Broadband and Sales of equipment, partially mitigated by a higher Enterprise Business revenue. For the first half of the year, profits were down 25% to $93.5m whilst revenue dipped 0.9% to $1.15b.

Mobile service revenue fell 9.9% to $192.3m in Q2 amidst lower IDD, voice and excess data usage, roaming, lower data subscription and VAS (value-added services) revenues, partially offset by the increase in plan subscription and enterprise SMS revenues.

As of 30 June 2019, post-paid mobile subscriber base stood at 1,477,000 after the quarter’s net add of 39,000 subscribers. Compared to the previous year, StarHub’s post-paid customer base increased by 101,000 customers or 7.4%.

Post-paid mobile average revenue per user (ARPU) fell by $5 to $40, mainly due to lower data subscription, VAS and data usage revenues. The overall average smartphone data usage increased YoY for both Q2 and H1 to 7.5GB and 6.9GB, respectively. Post-paid mobile monthly average churn rate was 1.1% for both Q2 and H1.

Meanwhile, pre-paid mobile customer base shrank by 93,000 customers to 789,000. The decline was partly due to the migration of pre-paid customers to SIM-only post-paid plans. Pre-paid mobile ARPU was at $14 and $13 for Q2 and H1, respectively.

Meanwhile, StarHub’s Pay TV service revenue fell 23.6% to $64.7m in Q2 and 18.1% YoY to $135.5m in H1. The decrease was mainly due to a lower subscriber base.

As of 30 June 2019, Pay TV households stood at 374,000 after the quarter’s net churn of 20,000 households. Compared to a year ago, Pay TV households were lower by 64,000.

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Monthly average churn was higher at 2.1% and 1.8% for Q2 and H1, respectively, mainly due to higher Cable TV churn as a result of the impending shut-down of the cable network. Pay TV ARPU of $44 in Q2 and $46 in H1 were lower when compared to the corresponding periods last year, mainly due to promotional offers to drive migration of existing cable subscribers to fibre.

Broadband service revenue of $45.1m in Q2 and $92.2m in H1 were 2.2% and 1.2% lower YoY, respectively, mainly due to lower ARPUs. Broadband ARPU of $29 in Q2 and $30 in H1 were lower when compared to the corresponding periods last year, mainly due to promotional offers to drive higher gross adds and migration of existing cable subscribers to fibre broadband. Broadband average monthly churn was at 1.0% and 0.9% in Q2 and H1, respectively.

Enterprise Business revenue increased by $17.8m YoY in Q2 thanks to higher cybersecurity and voice revenues, partially offset by the decrease in revenues from domestic leased circuits and managed services.

Revenue for H1 also rose by $34.4m YoY in H1 due to higher contributions by cybersecurity, voice and managed services revenues, partially offset by the decrease in revenue from domestic leased circuits. Data & Internet service revenue in Q2 and H1 was lower due to the renewals of domestic leased circuits at lower market rates.

Managed services revenue for Q2 was lower YoY due to fewer completed projects during the quarter. The YoY increase in H1 was mainly due to higher demands for cloud, cryptographic and digital security solutions.

Voice services revenue in Q2 and H1 was higher mainly due to higher international voice traffic usage and smart messaging revenues. The growth in cybersecurity services in Q2 and H1 was largely contributed by the consolidation of Ensign from 4Q2018 onwards and higher demand for these services.

For FY2019, StarHub intends to pay a dividend of at least 9 cents per ordinary share, at a rate of 2.25 cents per quarter.