StarHub rings in 12.4% drop in Q1 net profit

StarHub announced that its net profit for the first quarter ended March 31 fell by 12.4 per cent to $73.7 million. -- PHOTO: BLOOMBERG 
StarHub announced that its net profit for the first quarter ended March 31 fell by 12.4 per cent to $73.7 million. -- PHOTO: BLOOMBERG 

SINGAPORE - StarHub announced that its net profit for the first quarter ended March 31 fell by 12.4 per cent to $73.7 million.

This came as its operating expenses grew 13.1 per cent to $534.7 million, which the company attributed mainly to the higher cost of sales, especially of equipment sold.

It blamed a further $6.2 million growth in other expenses on the strength of the United States dollar against the Singapore dollar, as well as higher professional and outsourcing expenses.

Profitability had also been affected by the increase in handset subsidies as more new and re-contract customers signed up for new smartphones.

The lower profit came despite an increase of 8.1 per cent in revenue, which stood at $617.9 million.

StarHub's revenue was helped by the continued strong demand for new smartphones, which led to a 180.9 per cent increase to $77.5 million in revenue from equipment sales - the same equipment sales that raised its expenses.

But its service revenue for the quarter fell slightly by 0.6 per cent, depressed by the sharp decline in broadband revenue, which fell 10.8 per cent to $48.1 million.

StarHub said the number of broadband subscribers had actually increased from a year ago, but price competition had lowered subscription revenue.

Mobile service revenue also fell slightly by $500,000 to $305.4 million. StarHub blamed the blow taken by its pre-paid mobile services, which lost nearly a quarter of its customers in the past year as cards expired and the limit to three SIM cards per person cut demand. But this was offset by higher turnover from post-paid services as subscription revenue and excess data charges increased.

Service revenue was boosted by a 2.4 per cent increase to $96 million in revenue from StarHub's Pay TV service, as well as a 0.8 per cent increase to $90.9 million in revenue from fixed network services.

Earnings per share decreased to 4.3 cents from 4.9 cents in the same period last year. But net asset value increased to 13.1 cents on March 31 from 8.6 cents on December 31 last year. A quarterly dividend of five cents a share was declared.

StarHub said it expected monetisation of mobile data to improve as more customers bought tiered data plans. But it said it expected price competition in broadband to continue.

It added that it expected its service revenue this year to grow in the low single-digit range.