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Weaker performance by StarHub’s Mobile and Pay TV Services behind the drop in total revenue - 2018 Annual Report

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StarHub Limited (StarHub)

Source: StarHub

Launched in 2000 and listed on the Singapore Exchange mainboard since 2004, StarHub is a home-grown Singapore company that provides communication, entertainment and digital solutions to individuals and enterprises.

FY 2018 Financial Highlights:

Source: StarHub FY 2018 Presentation Slides

  • StarHub’s FY 2018 total revenue declined by 2% year-on-year to SGD 2.36 billion.
  • EBITDA for FY 2018 dropped by 11.8% to SGD 567 million when compared to the previous year.
  • The company recorded total operating expenses of SGD 2,089.7 million in FY 2018, which represented a 1.8% year-on-year increase. Further, FY 2018 cost of sales rose by 3.3%, while other operating expenses remained stable at SGD 1,014.7 million.
  • As a result, net profit after tax for FY 2018 fell by 26.7% year-on-year to SGD 200.5 million.

Performance Drivers:

Source: StarHub FY 2018 Presentation Slides

StarHub experienced a drop in total revenue for FY 2018, mainly as a result of lower revenues from Mobile Services and Pay TV Services. Broadband Services and Sales of equipment remained relatively stable, while only Enterprise Fixed Services experienced an increase in revenue for the year.

Performance Drivers (Positive Factors)

  • Enterprise Fixed Services

StarHub’s Enterprise Fixed services comprises traditional connectivity services, managed services and ICT (Information and Communication Technologies) solutions. FY 2018 revenue for this segment increased by 16% year-on-year to SGD 510.8 million, mainly attributed to the growth in managed services, as well as the consolidation of enterprise solutions businesses – Ensign InfoSecurity (from October 2018) and D’Crypt (from January 2018).

  • Broadband Services

The company’s Broadband service business remained stable compared to the previous year, with SGD 185.8 million in revenues for FY 2018. StarHub added 15,000 new broadband customers, which expanded the base to 482,000. This was the result of attractive promotions and the introduction of several new products.

  • Sales of Equipment

FY 2018 revenue from Sales of Equipment remained relatively stable at SGD 529.6 million. A drop in premium mobile handset revenue was offset by an increase in the sales of smart home equipment.

Performance Drivers (Negative Factors)

  • Mobile Services

StarHub’s FY 2018 Mobile revenue decreased by 8% year-on-year to SGD 825 million, on the back of lower IDD, excess data usage revenue, as well as a higher mix of SIM Only plans. Nevertheless, mobile market penetration continued to be high at 147%.

Dissecting this segment further, the company’s post-paid customer base grew by 2% to 1.4 million, while prepaid customer base dropped by 16% to 788,000. Meanwhile, average smartphone data usage increased by 33% over the previous year to 5.6GB.

  • Pay TV Services

FY 2018 revenue for Pay TV services declined 11.9% year-on-year to SGD 311.3 million. This was primarily attributed to the rising popularity of OTT streaming services. In 2018, an average of 4,000 Pay TV customers per month exited long-term Pay TV contracts for alternative sources of content and entertainment. The total number of Pay TV customers as of 31 December 2018 was 409,000. As part of StarHub’s Strategic Transformation Programme, the company will rationalize and balance the cost of obtaining/extending pay TV content against the needs of Pay TV customers.

Source: StarHub FY 2018 Presentation Slides