Starhub's profit down 5.6% to $37.3m in Q2

Most of its business segments saw decline in revenue.

Starhub saw its profit attributable to shareholders dip 5.6% YoY to $37.3m in Q2 from $39.5m in Q2 2019, an SGX filing stated. For the H1 period, profit crashed 17.2% YoY to $77.4m from $93.5m in H1 2019.

In its first full financial quarter impacted by the global COVID-19 pandemic, StarHub’s Q2 service revenue declined 15% YoY to $376.2m, no thanks to lower contributions from mobile, broadband and pay TV.

Total revenue also fell 18% YoY to $453.4m in Q2 from $552.8m.

Its mobile business recorded a 25.4% YoY decline in revenue to $143.4m, no thanks to COVID-19 that resulted in lower IDD, roaming and prepaid revenues, coupled with lower excess data usage, plan subscriptions and VAS revenues.

Consequently, postpaid and prepaid average revenue per unit (ARPU) slipped to $30 and $10 in Q2. Notably, average monthly churn rate for postpaid lowered further to 0.8%, signalling stabilisation in the postpaid segment during the pandemic.

Pay TV and broadband segments recorded a 27.6% and 4.2% YoY decrease in Q2 revenue, respectively, to $46.9m and $43.2m. ARPU lowered to $39 from $44 for pay TV, whilst broadband ARPU lowered to $28 from $29, compared to Q2 2019. The lower YoY revenue and ARPU was a result of promotional activities offered in FY2019 to encourage consumers to migrate from cable to fibre.

The lower broadband revenue was also due to a one-time 20% rebate on home broadband monthly fee that was extended to customers due to a service disruption in April. Excluding the rebate, Broadband revenue would have declined YoY by a gentler 0.9% in Q2.

Further, revenue from its enterprise business recorded a 1.7% rise in Q2 to $142.7m. Contributions from cybersecurity services grew 10.1% in Q2 to $39.8m, whilst network solutions recorded a 1.2% YoY dip to a $102.8m revenue.

Lastly, Q2 revenue from sales of equipment crashed 30.1% YoY to $77.2m, mainly due to lesser handsets sold during the Circuit Breaker period enforced from 7 April to 1 June.

Other income rose $17.3m, thanks to the $15.7m received from the Job Support Scheme pay-outs.

StarHub’s cash generation remains strong with a 185.1% YoY growth in Q2 free cash flow to $155.5m from $54.5m in Q2 2019, mainly due to higher cash from operating activities coupled with lower Capex payments. Net debt to EBITDA declined to 1.29x as at 30 June.

Looking ahead, Starhub is expecting their service revenue to decline 10% to 12% YoY due to lower consumer revenues mainly resulting from COVID-19 measures, offset by stronger contributions from cybersecurity services.

Group service EBITDA margin for FY2020 is expected to be between 27% and 29%, whilst the capex commitment–excluding spectrum, 5G Capex and Capex relating to the IT Transformation–is expected to be between 6% and 8% of total revenue.

StarHub also stated that they remain committed to its dividend policy to pay out at least 80% of net profit attributable to shareholders, payable on a semi-annual basis. Taking into consideration short-to-mid-term cash flow requirements and results reaped from the ongoing business transformation initiatives, StarHub is declaring an interim dividend of 2.5 cents per ordinary share for H1.

Based on current business conditions and operating environment, the group expects to declare a final dividend for H2 which is equal to or higher than the interim dividend of 2.5 cents.