StarHub's Q2 profit down 5.6%, but telco upbeat on 5G

StarHub's net profit fell 5.6 per cent to $37.3 million for the second quarter ended June 30, from $39.5 million in the year-ago period.

This came as most of the group's retail stores were closed during Singapore's circuit breaker period during the quarter, while its roaming, IDD and prepaid mobile revenues also took a hit from the steep decline in travel as a result of strict border controls instituted in late-March.

The telco said in results released yesterday that Q2 2020 was the first full financial quarter affected by the coronavirus pandemic.

Total revenue sank 18 per cent to $453.4 million for the three months, from $552.8 million in the year-ago period period.

Service revenue slumped 15 per cent to $376.2 million on lower contributions from mobile, pay TV, broadband and equipment sales.

StarHub said in its outlook statement that businesses are expected to continue investing in their network infrastructure as they adopt cloud services, which could help to mitigate pricing erosion in traditional telco connectivity service.

Mr Charlie Chan, head of enterprise at StarHub, noted on an earnings call that the telco saw growth in the second quarter as the Covid-19 pandemic led to more telecommuting.

CEO Peter Kaliaropoulos said in a statement that "the challenging environment and business conditions will likely sustain throughout 2020".

For FY2020, the group is expected to see a 10 per cent to 12 per cent decline in service revenue due to uncertainties in consumer demand caused by Covid-19 measures. All the same, the company is upbeat on its plans for 5G development, with growing interest in 5G solutions among the anticipated drivers for its enterprise business.

StarHub and M1 have jointly clinched a licence for a nationwide 5G network, with roll-out to start next year and each partner to individually offer commercial services also from next year.

StarHub - which expects to make an initial capital investment of $200 million, front-loaded in H2 2020 and 2021 - said that it is tapering off its capex on legacy networks to the minimum required for regulatory obligations.

The capex savings will be redirected towards the 5G network, while more investments may also be made based on business demand.

For the first half of this year, net profit declined 17.2 per cent to $77.4 million, and total revenue dropped 16.5 per cent to $959.6 million. Service revenue for the six months was down 11.9 per cent to $781.1 million.

StarHub shares closed down one cent or 0.8 per cent at $1.21 yesterday.

THE BUSINESS TIMES

A version of this article appeared in the print edition of The Straits Times on August 08, 2020, with the headline 'StarHub's Q2 profit down 5.6%, but telco upbeat on 5G'. Print Edition | Subscribe