Local telco group StarHub announced that its latest FY2021 ended December 2021 earnings have come in at $149.3 million, some 5.5% lower y-o-y than $157.9 million in FY2020.

The drop in earnings was mainly due lower lower payouts from the government in the form of the Job Support Scheme (JSS). Excluding the JSS, the group would have recorded earnings growth of 17.0% y-o-y from $126.7 million to $148.3 million.

Revenue for the full year was 0.7% higher y-o-y at $2.04 billion, compared to $2.03 billion last year, mainly due to higher contributions from broadband and enterprise business, partially offset by lower revenues from mobile, entertainment and sales of equipment.

Mobile service sales declined by 8.5% y-o-y to $830.7 million, as prepaid revenue declined, because this segment is still affected by the decline in number of tourists and foreign workers, as a result of ongoing travel restrictions. Postpaid revenue also declined due to lower roaming contribution, but the group has noted that roaming contribution has started to pick up in 4QFY2021 as Singapore launched more Vaccinated Travel Lanes (VTL).

Broadband service revenue of $194.4 million for the full year was 10.4% higher y-o-y at $194.4 million, mainly due to higher average revenue per user (ARPU) from continued reductions in subscription discounts and the absence of a one-time 20% rebate on home broadband monthly fee extended to customers for a service disruption in April 2020. Excluding the one-time rebate from prior year, broadband service revenue for the full year would have been $16.8 million or 9.5% higher y-o-y.

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Entertainment service revenue declined by 4.3% y-o-y to $180.0 million, mainly due to a lower subscriber base, offset by higher ARPU achieved by the higher-priced HomeHub bundled plans, lower commercial TV revenue and lower spending on advertising by enterprise customers.

Enterprise segment revenue increased by 9.4% y-o-y to $706.1 million, making this segment the group’s largest revenue contributing sector, mainly due to higher contributions from cybersecurity services and the first full-year consolidation of revenue from Strateq under the regional ICT Services segment. This was partially offset by lower revenues from data & internet, managed services and voice services.

Revenue from sales of equipment decreased y-o-y by 1.9% to mainly due to $431.4 million, due to lower volume of handsets sold arising from stock constraints of certain 5G handset models. Unit selling price of 5G handset models were, however, generally higher.

But with other income declining some 65.7% y-o-y to $14.2 million and operating expenses dropping by 0.8% y-o-y to $1.8 billion, total profit from operations came in at $231.8 million, a slight 0.2% increase from the previous year.

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Finance expenses for the year increased by 20.3% y-o-y to $49.1 million from $40.8 million last year.

As at end-December 2021, cash and cash equivalents stood at $821.5 million.

StarHub has proposed a final dividend of 3.9 cents, higher than 2.5 cents declared in the previous year. This brings StarHub’s full year distribution to 6.4 cents, or a payout ratio of 80%, in line with the group’s dividend policy.

In view of some of the group’s recent progression in its DARE+ growth roadmap, which includes several significant investments, the group has provided a guidance for FY2022 and an outlook for FY2023.

StarHub expects service revenue to grow at least 10% in FY2022 with higher revenues to be achieved across most segments, as well as maiden contributions from the acquisitions of JOS Singapore and Malaysia, as well as MyRepublic Boradband. Subsequently, FY2023 service revenue is targeted to grow by an incremental 5% to 10% y-o-y as StarHub starts realising early outcomes from its DARE+ initiatives.

With its upfront investments for IT transformation, talent acquisition, entertainment content and network repairs and maintenance to support its DARE+ initiatives, as well as higher opex from increased electricity tariffs, service Ebitda margins is expected to be at least 20% in FY2022.

This is then targeted to recover in FY2023 to at least 23%.

For FY2022 and FY2023, the group remains committed to distribute at least 5,0 cents per share.

Shares in StarHub closed at $1.33 on Feb 11.

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