SINGAPORE - StarHub on Wednesday (May 6) said its first-quarter net profit fell by 25.7 per cent from a year ago to $40 million with the mainboard-listed telco expecting travel restrictions globally and circuit breaker measures at home to hit full-year revenue and profitability.
Total revenue dropped by 15.2 per cent year on year to $506.2 million for the three months to March 31. Of this, services revenue declined 8.9 per cent to $404.9 million as a result of lower revenues from mobile, broadband and pay TV.
The enterprise business, however, posted a 13.9 per cent rise in revenue to $152.8 million, led mainly by a 136.8 per cent surge in cyber-security services revenue to $62.4 million.
CEO Peter Kaliaropoulos in a media release said the results "reflect the impact of Covid-19 and the early softening of the economic environment".
"With border controls and movement restrictions, roaming, IDD and prepaid revenues have significantly reduced. Our enterprise business has also experienced some project and tender delays, coupled with longer sales cycles," he said.
Looking ahead, the telco said the Covid-19 crisis is expected to have a material impact on the group's revenue and profitability for the year, "with expectations for revenue declines for most business segments at varying degrees".
But it withdrew all financial guidance for 2020, citing uncertainty over the impact of Government support measures and the economic situation due to the pandemic. Shareholders will be updated once there is greater visibility, it added.
In February, while reporting its previous quarterly results, the telco had guided that service revenue is likely to improve by 1 to 3 per cent this year despite the virus outbreak, with higher revenues from the cybersecurity services expected to make up for lower mobile and pay-TV contributions.
Notwithstanding the uncertain outlook, StarHub stressed it "remains fully committed to and has the resources to continue with its strategic initiatives". These include setting out on its 5G joint project, closing the $82 million purchase of a stake in Malaysian business solutions firm Strateq, and growing its enterprise business.
Singapore's largest telco, Singtel, and a joint-venture between StarHub and M1 were last week awarded provisional licences to build two nationwide standalone 5G networks. The winners must start rolling out their standalone networks from January 2021, with coverage of at least half the island by end-2022. StarHub and M1 will separately offer 5G retail services to end-users.
On the key 5G project, StarHub said on Wednesday that it intends to fast-track the rollout of 5G services, with more details to be released closer to commercial readiness.
StarHub also said it will continue to manage operating expenses, capital expenditure and cash flow to mitigate the impacts of the revenue decline. Operating expenses for the first quarter were reduced by 14.5 per cent year on year to $448 million, while free cash flow grew 5.6 times to $119 million.
It noted that it will not need any refinancing until 2022, having negotiated the refinancing of bank loans due for repayment this year. It also has enough credit facilities to meet working capital and funding needs, and expects to generate positive operating cash flow this year.
Its shares on Wednesday rose $0.03 or 2.1 per cent to $1.49, on a cum-dividend basis, before the results were released.