SINGAPORE (Feb 6): Market watchers have turned pessimistic on the outlook for StarHub, after the telco announced that it would cut distributions per unit by 20% for FY17 as operating expenses for its main mobile business continue to climb.
OCBC Investment Research’s analysts Eugene Chua and Low Pei Han downgraded the stock to a “sell” with a fair value of $2.65. The pair noted that StarHub’s 4QFY16 revenue had risen 0.2% to $634.8 million due to higher service revenue, but operating expenses rose faster at 2.7% to $570.7 million. Coupled with lower income grants and higher handset subsidies, quarterly earnings fell 33.2% to $54 million.
For the full year, revenue fell 1.9% to $2.4 billion, on lower mobile revenue, and full year earnings fell 8.3% to $341.4 million.