StarHub’s Q1 profit down 12.4% on handset subsidies

SINGAPORE — Hit by higher handset subsidies and lower broadband revenue, StarHub yesterday reported first-quarter profit plummeted 12.4 per cent from the corresponding period a year earlier, even as revenue jumped.

For the three months ended March 31, net profit totalled S$73.7 million, down from S$84.2 million in the year-earlier period. Total revenue rose 8.1 per cent to S$617.9 million, mainly due to equipment sales, as consumers snapped up new smartphones. The cost of equipment sold jumped 79.6 per cent to S$157 million.

Service revenue eased 0.6 per cent to S$540.4 million, mainly due to lower broadband takings, which fell 11 per cent to S$48 million. Stiff price competition lowered subscription revenue from both re-contracting and new customers, said StarHub.

“This quarter, the demand for new smartphones continued to be strong and we took the opportunity to pull ahead our acquisition and retention activities. While this impacted profitability for the quarter, we expect it to contribute positively to our performance subsequently,” said StarHub chief executive Tan Tong Hai.

StarHub said it expected service revenue to grow in the low single-digit range for the year.

In the first quarter, StarHub saw growth in its customer base for its post-paid mobile, broadband and pay-TV businesses. “Our attractive hubbing bundles continued to yield positive results, with good subscriber growth and low churn rates recorded across all lines of business. In particular, our pay-TV witnessed the lowest churn rate ever,” said Mr Tan.

The pay-TV business achieved 2.4 per cent growth to S$96 million, as it drew higher subscription revenue from a larger customer base that grew 11,400 to 545,000 households, StarHub said. The churn rate fell to 0.7 per cent from 0.9 per cent in the previous corresponding period, as the telco stepped up customer retention initiatives.

Fixed network revenue rose 0.8 per cent to S$90.9 million, with the data and Internet services segment gaining 2 per cent to S$78 million, while voice services revenue fell 6.1 per cent to S$12.8 million.

The company declared an interim dividend of 5 cents per share for the first quarter. Before the results announcement, StarHub shares gained 0.7 per cent to S$4.27 each. TAN WEIZHEN