The Good And Bad That Investors Should Know About Starhub Ltd’s Latest Earnings Update
StarHub Ltd (SGX: CC3) is one of the three major companies in the telecommunication industry. StarHub has five business segments, namely, Mobile, Pay TV, Broadband, Enterprise Fixed and Equipment Sales.
The company recently released its 2018 second quarter (Q2 FY18) earnings update. In this article, we will look at the good and the bad from its results announcement.
The positive points
First of all, overall revenue was up 5.4% year-on-year mainly due to stronger performance in the Enterprise Fixed segment, where revenue grew 22.4% year-on-year. The growth in managed services revenue was largely contributed by higher demand for cyber security, cloud, cryptographic and digital security solutions. This was the fourth successive quarter of double-digit revenue growth for this segment.
Secondly, Broadband revenue came in marginally higher in the quarter mainly due to higher subscriber numbers. Year-on-year, fibre broadband subscribers grew from 373,000 to 393,000.
Last but not the least, free cash flow jumped from S$16.3 million a year ago to S$97.1 million this quarter, mainly due to lower capital expenditure.
The negative points
First of all, Starhub’s profit attributable to shareholders declined 22.8% year-on-year to S$61.7 million, largely due to weak performance in its Mobile and Pay TV businesses.
Secondly, the number of subscribers declined year-on-year for Mobile and Pay TV services segments. In addition, the Mobile segment’s ARPU (average revenue per user) declined by S$4 and S$2 for post-paid and pre-paid subscribers, respectively.
Lastly, StarHub’s net debt position grew from S$632.3 million, as at 31 December 2017, to S$733.9 million, as at 30 June 2018.