Broadband war: Lower service revenue dragged Starhub's 1Q earnings

Net profit dropped by 7.7%.

According to OCBC Investment Research, StarHub Ltd posted 1Q14 revenue of S$571.4m, down 1.5% YoY and 6.9% QoQ, meeting just 23.5% of its full-year forecast.

Here's more:

StarHub blamed the drop on lower service revenue (mainly due to intense competition in its Broadband business, where revenue tumbled 13.6% YoY and 4.3% QoQ) and lower equipment sales (down 15.9% YoY and 44.7% QoQ on fewer handsets sold).

We also note that mobile revenue saw a muted 1.3% YoY rise (but slipped 1.5% QoQ); and as StarHub declined to break down the mobile revenue into pre-paid and post-paid revenue, we estimate that pre-paid revenue probably slipped as much as 11.7% YoY and -1.7% QoQ, while post-paid rose just 1% YoY but fell 4.9% QoQ.

Net profit fell 7.7% YoY (+0.6% QoQ) to S$84.2m, or 22.4% of our FY14 estimate; this as tax increased 15.7%YoY and 21.6% QoQ to S$21.4m, but management expects it to “normalize” over the next few quarters. StarHub declared a quarterly dividend of S$0.05/share as guided.

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