SINGAPORE (Nov 3): The lights are dimming on StarHub.

The telecommunications service operator saw earnings fall 27.6% y-o-y to $86 million in 3Q16 as revenue slipped 3% to $585.3 million, mainly due to lower revenue from mobile services and sale of equipment, and a decline in non-operating income.

Except for broadband services, which saw a 7.1% increase in revenue to $54.7 million, revenue contributions fell across the board for all of StarHub’s business segments.

(See <a href="http://www.theedgemarkets.com.sg/sg/article/starhub%E2%80%99s-3q-earnings-drop-276-86-mil-lower-mobile-services-revenue-decline-non-operating">StarHub’s 3Q earnings drop 27.6% to $86 mil from lower mobile services revenue, decline in non-operating income</a>)

“StarHub’s dividend policy of paying out 5 cents per quarter and 20 cents per year is at risk of downgrade,” says UOB Kay Hian analyst Jonathan Koh in a Thursday report.

Koh says StarHub’s longstanding dividend policy is at risk of potential downward revision going forward as grants from the Next Generation Nationwide Broadband Network (NGNBN) taper off and competition intensifies with the potential entry of a fourth mobile operator.

UOB Kay Hian is maintaining its “sell” recommendation on StarHub, and lowering its target price to $2.40 from $2.62 previously.

“We further cut our net profit forecasts for 2016 by 4.4% and 2017 by 5.9% due to the continued pressure on its mobile and pay-TV businesses,” Koh says.

DBS Group Research, too, is bearish on prospects for StarHub.

“We believe revenue declines in mobile and pay TV is likely to continue through FY17F,” says DBS analyst Sachin Mittal in a flash note on Thursday.

However Mittal says StarHub will only see moderate impact from potential entry of a new mobile player.

“With only close to 50% of revenues coming from mobile and due to more fixed-mobile-TV bundling, StarHub will be less impacted than M1,” Mittal adds.

DBS is rating StarHub as “fully valued” with a target price of $2.80.

As at 4.00pm, StarHub is trading 11 cents lower at $3.27.

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