CFA Society Singapore
SINGAPORE (Feb 14): StarHub saw its earnings plunge 74% to $14.1 million for the 4Q ended December on higher operating expenses, from $54.0 million a year ago.
This brings FY17 earnings to $249.0 million, some 27.1% lower than earnings of $341.4 million a year ago.
Operating expenses rose by 9.3% to $624.0 million in 4Q17, from $570.7 million a year ago.
The increase was largely due to a one-off provisions made for certain staff benefits to rationalise and retain talent in recognition of the business challenges and operating conditions, as well as for a leasing contract related to the cable network.
As a result, staff costs rose 15.0% during the quarter to $84.7 million, while operating leases jumped 39.9% to $40.1 million.
In addition, cost of sales grew 11.4% to $329.3 million on higher cost of equipment sold and cost of services.
The group’s EBITDA fell 28.6% to $96.8 million in 4Q17.
Total revenue rose slightly by 2.2% to $649.0 million in 4Q17, from $634.8 million a year ago.
The higher revenue was led by a 20.9% improvement in Enterprise Fixed revenue to $129.6 million, due to higher contributions from data and internet services, but partially offset by lower contributions from voice services.
The increase was partially offset by a 3.5% decline in Mobile revenue to $301.0 million as post-paid and pre-paid average revenue per unit (ARPU) were lower during the quarter and a 7.4% drop in Pay TV revenue to $86.9 million mainly due to a reduced customer base.
As at end December, cash and cash equivalents stood at $345.2 million.
The board has recommended a proposed final dividend of 4 cents per share for FY17, down from the 5 cents per share paid a year ago.
“In 2018, we will be taking our customer-centric approach a step further by adopting a higher level of artificial intelligence to anticipate our customers’ needs and recommend new services to them. The year will also usher in changes to the competitive landscape and we are ready to seize opportunities offered by the market,” says Tan Tong Hai, CEO of StarHub.
The group adds that it will be adopting SFRS(I) 15 (Revenue from Contracts with Customers), effective from Jan 1, 2018. Under the new standard, service revenue is expected to decline, mainly due to the allocation of service revenue to sales of equipment revenue.
Based on the current outlook, StarHub guides that its 2018 service revenue will be 1-3% lower y-o-y.
Chong Yoke Sin, chief of enterprise business group of StarHub, says the enterprise fixed services orderbook is “healthy” and the group is focused on growing recurring revenue through managed services.
“The fourth quarter results for enterprise came from [acquired cybersecurity subsidiary] Accel and organic growth. We aim to have as much recurring revenue as possible. We aim to maintain this level [similar to 4Q],” she says.
Shares of StarHub closed 12 cents higher, or up 4.4%, at $2.86 on Wednesday.