StarHub posts 21% decline in 1Q earnings to $73 mil on higher expenses, lower other income

StarHub has reported $73.1 million in earnings for the 1Q ended March, 21.3% lower as compared to $92.8 million reported the year before on the back of higher operating expenses and lower other income.

Revenue for the quarter grew 0.2% on-year to $592.3 million from $590.9 million in the previous year.

Broadband service recorded higher revenue at $54 million during the quarter from an increased mix of customers taking fibre plans.

Average revenue per user (ARPU) also rose $1 increase to $37 in 1Q.

Enterprise fixed service revenue was up 3% to $99 million mainly due to the higher engagement of data and internet services.

Revenue from sale of equipment also rose by $6.7 million to $55.3 million due to the higher volume of handsets sold at a higher average selling price from a higher mix of high-end smartphones.

These were however partially offset by lower revenue contributions from the group’s mobile and Pay TV segments, which declined 1% and 7% to $296 million and $88 million respectively.

Mobile service revenue declined mainly from a drop in both post-paid and pre-paid service. On the other hand, Pay TV service revenue fell primarily due to a smaller subscriber base.

Total operating expenses however grew 2.6% y-o-y to $498.7 million compared to $485.9 million a year ago, as a 13% increase in higher cost of sales to $259.9 million mitigated the 6.7% decline in other operating expenses to $238.8 million.

As a percentage of revenue, the total operating expenses were 2% higher at 84.2% in 1Q17 as compared to that of 1Q16.

Compared to 1Q16, other income in 1Q17 was $12.3 million lower, mainly due to lower Next Generation Nationwide Broadband Network (NGNBN) grants.

The number of households with three or more services from StarHub stood at 338,000, lower compared to 350,000 households a year ago due to higher churn in overall TV households.

StarHub has declared an interim dividend of 4 cents per share for 1Q17, which will be paid on May 26.

“We have made the necessary investments in the recent spectrum auction to continue delivering quality mobile services to our increasing bobile base. The acquired spectrum will also facilitate our roadmap towards 5G,” says StarHub’s CEO Tan Tong Hai in a Wednesday press release.

“Driving growth in the enterprise business remains our priority and we are on track to introduce new cyber security, IoT and smart retail solutions to the market. We will grow our enterprise digital services offerings with our latest strategic management addition,” he adds.

“Underpinning our overall business strategy is our continued digital transformation drive to increasingly engage and service our customers via digital channels and self-help applications.”

This article first appeared in The Edge Singapore Market Report.

Read more: 9 things I learned from StarHub’s 2017 AGM

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