It expects services revenue to dip 1-3% as its post-paid base shrank 1.4% in 2017.
It's headaches persisted in 2017 as its post-paid subscriber base contracted by 1.4% YoY, due to one-time termination of 23,000 inactive legacy data-only lines that occurred in Q3, UOB Kay Hian said. However, in Q4, the telco gained 6,000 subscribers QoQ.
According to a report, post-paid average revenue per user (ARPU) declined 3% YoY to $68 due to the shift towards SIM-only plans and lower contribution from voice and roaming. Data usage per data user increased 31% YoY to 4.5GB. Thus, post-paid mobile revenue contracted 3.2% YoY.
StarHub lost another 9,000 pay-TV subscribers in Q4. This is the tenth consecutive quarter of contraction for its pay-TV subscriber base caused by piracy in the form of illegal set-top boxes and online video streaming. Pay-TV ARPU edged lower by $1 QoQ to $50. Consequently, pay-TV revenue dropped 7.5% YoY, commensurate with the contraction of its pay-TV subscriber base.
OCBC Investment Research previously said that telcos cumulatively lost 4% of their Pay-TV subscriber base as users are switching over to over-the-top content providers. However, the declines in telcos' subscriber bases are only the first wave of challenges they are facing.
The heated competition between telcos is expected to intensify in 2018, as the three prepare for the entry of TPG Telecom (TPG) and two other mobile virtual network operators (MVNO) into the fray. Telcos' desperation to lock in subscribers pushed their data yields down by 17% YoY from US$5.7/GB to US$4.8/GB.
These subscriber losses killed off the company's hopes of improved profits in 2018. Management guided that service revenue would be 1-3% lower for 2018. Earnings margin on service revenue is expected to narrow to 24-26% due to competition for mobile, pay-TV and broadband businesses, and higher handset subsidies, compared with 27.9% for 2017.
Management has lowered its guidance for capex from 13% to about 10% of total revenue (excluding spectrum payments). StarHub intends to maintain a dividend of 4 cents per quarter for 2018.
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