SINGAPORE (THE BUSINESS TIMES) – StarHub on Thursday (Aug 4) posted a 10.3 per cent drop in net profit to $60.9 million for its half year ended June 30, from $67.9 million a year ago, after higher expenses.
This was despite higher revenue, which rose 8.7 per cent to $1.1 billion from $973.7 million a year ago, the group said in a regulatory filing.
The gain in revenue was mainly due to higher contributions from its mobile, broadband, entertainment and enterprise businesses, offset by lower sales of equipment, it added.
StarHub’s total operating expenses in the first half of 2022 were 10.5 per cent higher at $967 million from $875.5 million a year ago. This was mainly due to the consolidation of JOS Singapore and JOS Malaysia (under regional information and communications technology services) and MyRepublic Broadband, as well as higher cyber-security services operating expenses, the group said.
Earnings per share fell to 3.3 cents for the half year, from 3.7 cents a year ago.
At a results briefing, StarHub chief executive Nikhil Eapen said the company was not unique in facing challenges with inflation and that it had seen staff wages rise more quickly in the cyber-security segment.
“With cyber security, (rising inflation) is obviously particularly acute because you are looking for highly trained professionals who are conversant in not just cyber security but also in areas like data science and statistics,” he noted.
Mr Johan Buse, chief of StarHub’s consumer business group, said the company was “actively contemplating” how it would deal with the challenge of inflation and the company would not rule out any options, including the potential raising of prices.
Still, the company noted that it was still facing “escalating” competition in areas like its mobile segment.
In particular, the company gained 26,000 new prepaid subscribers year on year in the second quarter of this year, but average revenue per user (ARPU) fell $2 to $8 in the same period due to increased promotions. On the other hand, second-quarter post-paid ARPU grew $1 to $29 from the previous year, while the post-paid subscriber base grew 77,000 subscribers due to an increase in the telco’s giga! subscriber base.
Furthermore, revenue from StarHub’s entertainment segment grew 5.4 per cent to $49.2 million from the previous year in Q2 2022. The telco attributed this to higher advertising revenue and subscription prices.
Mr Buse pointed out that uptake of the company’s English Premier League plan, which it announced on Jun 8, was “very encouraging”, although the revenue from the segment will only be booked in the coming quarters.
The results largely beat the forward guidance that StarHub provided for, with service revenue rising 11.7 per cent year-on-year for the half-year, compared to the 10 per cent that it had expected. In addition, service earnings before interest, tax, depreciation and amortisation (Ebitda) stood at 24.6 per cent, beating the company’s guidance for at least 20 per cent.
This was likely due to delays in capital expenditure, which stood at 7.5 per cent of revenue, falling short of the company’s guidance of 12 to 15 per cent of revenue. The capital expenditure is meant to go largely towards the building of StarHub’s 5G network and other IT expenditures as part of its 5-year growth roadmap launched last November, also known as Dare+.
Still, Dennis Chia, StarHub’s chief financial officer, said he expects the company to come in at the lower-end of the company’s capital expenditure guidance for the rest of the year.
The group has declared an interim dividend of 2.5 cents per share for the half year, unchanged from the previous year. Books close on Aug 16 and the dividend will be paid on Aug 31.
Shares of StarHub closed flat at $1.26 on Thursday, before the results were announced.