StarHub's cable TV subscriber count drops by 9,000

Is it losing the telco race?

According to Barclays, 4Q results were in line at the operating level but higher on profits from higher non-operational items.

The resilient 5% yield and stable earnings are the primary drivers of the stock's resilience – we believe this is not likely to change short-term. We continue to struggle to find reasons to own the stock at these levels.

StarHub is the most expensive of the three Singapore telecom stocks and the implied 5.5% yield is similar to the peer group.

Here's more from Barclays:

4Q EBITDA at S$171m (-2.5%yoy) was bang in line with our estimates; higher non-operational income and lower taxes meant net profit at S$87.9m (-5.1%yoy) was above our S$80m estimate. Service revenues at S$563m (+0.7%yoy) compared with our S$561m view.

2013 guidance – operationally looks in line with forecasts; capex higher though. (1) revenue growth expected in single digit range (we see at 2.2%, versus 4.7% for 2012); EBITDA margin on service revenues seen at 31% (our forecasts incorporate 30.9%; was 31.1% in 2012); (2) capex guided at 13% of operating revenue – this is about S$50m higher than the 11% we have in our estimates (S$266m currently) – StarHub indicates this as including payments for leasehold land and the construction of a cable TV network transmission centre; (3) annual cash dividend payout maintained at 20 cents/share (5% yield at current levels).

Operational takeaways: (a) The Cable TV subscriber base continued to shrink, down by 5K over the quarter to 536,000 (down 9K over the year) – StarHub attributes this to aggressive offer from competitors (SingTel). We note cable TV revenues have stayed stable and are yet to show any impact from this though; (b) stable mobile revenues (-1.3%yoy for 4Q) with no impact from LTE tiered pricing as yet; (c) fixed network services growth attributed to greater take up of NMN services and higher voice revenues as digital voice home services became chargeable.

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