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StarHub posts 5.6% drop in 2Q20 earnings to $37.3 million on lower revenue

Felicia Tan
Felicia Tan • 3 min read
StarHub posts 5.6% drop in 2Q20 earnings to $37.3 million on lower revenue
StarHub has declared an interim dividend of 2.5 cents per ordinary share for the period, which will be paid on September 2.
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StarHub reported earnings of $37.3 million for the 2Q20 ended June, down 5.6% from the $39.5 million posted a year ago.

Total revenue for 2Q20 fell 18% y-o-y to $99.4 million while 1H20 total revenue fell 16.5% y-o-y to $959.6 million. The decline in figures was primarily attributable to lower contributions from StarHub’s Mobile, Pay TV, Broadband and Sales of equipment segments. This was partially offset by higher contributions from its Enterprise Business segment.

Mobile service revenue for 2Q20 remained impacted by the Covid-19 pandemic as it fell 25.4% y-o-y to $143.4 million, mainly due to lower IDD, roaming and Prepaid revenues, lower excess data usage, plan subscriptions, and VAS revenues.

Pay TV logged a 27.6% y-o-y decline in 2Q20 revenue to $46.9 million, while revenue for Broadband fell 4.2% y-o-y to $43.2 million. The lower Broadband revenue was also attributable to a one-time 20% rebate on Home Broadband monthly fee due to a service disruption in April.

Excluding the rebate, revenue for Broadband would have declined marginally by 0.9% y-o-y.

Average revenue per user (ARPU) in 2Q20 fell to $39 from $44 for Pay TV and $28 from $29 for Broadband.

The lower y-o-y revenue and ARPU was a result of promotional activities offered in FY2019 to encourage consumers to migrate from cable to fibre.

The Enterprise business segment bucked the trend by recording a 1.7% y-o-y increase to $142.7 million.

Contributions from Cybersecurity services grew 10.1% in 2Q2020 to $39.8 million, while Network Solutions recorded a 1.2% y-o-y decline in 2Q20 revenue to $102.8 million.

2Q20 revenue for sales of equipment fell 30.1% y-o-y to $77.2 million due to lesser handsets sold during the circuit breaker period from April to June.

Other income rose $17.3 million mainly due to the $15.7 million in job support scheme (JSS) payouts recognised for the quarter.

StarHub’s total operating expenses fell 15.5% y-o-y to $418.9 million due to lower cost of sales and other operating expenses, although partially offset by the rise in operating expenses relating to cybersecurity services.

Profit from operations for the quarter fell 9.5% y-o-y to $51.8 million.

As at end June, cash and cash equivalents stood at $479.5 million, a steep increase from the $97.5 million logged last year.

StarHub has declared an interim dividend of 2.5 cents per ordinary share for the period, which will be paid on September 2.

Based on current business conditions and operating environment, StarHub says it expects to declare a final dividend equal to or higher than the interim dividend of 2.5 cents per ordinary share for 2H20.

In its outlook statement, StarHub will continue to focus on moving towards a variable cost structure, and transitioning towards new content delivery platforms for Pay TV.

On June 24, StarHub and M1 jointly received draft 5G licenses and spectrum rights by the Infocomm Media Development Authority (IMDA) to build and operate a 5G standalone network.

See also: Singtel, M1, and Starhub granted final 5G network licence from IMDA

Following the withdrawing of its financial guidance in May, StarHub warned that it expects its FY2020 service revenue to decline by 10% to 12% y-o-y due to uncertainties in consumer demand. Group service EBITDA margin is expected to be between 27% to 29% due to a change in the mix of revenue contribution on top of the impact of Covid-19.

“Based on the 5G network deployment and commitment accepted by the IMDA, the Group estimates its initial capital investment to be around S$200.0 million over the five-year period. Additional 5G investments may be considered as driven by business demand,” says StarHub in an August 7 statement.

Shares in StarHub closed flat at $1.22 on Aug 6.

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