Local telco StarHub CC3 announced that its 1HFY2024 ended June 30 earnings saw growth of 7.1% y-o-y to $82.1 million from $76.7 million a year ago.
This came on the back of total revenue remaining flat at $1.1 billion, unchanged from a year ago.
Service revenue gained 2.4% y-o-y to $939.2 million, lifted by strong growth in the group’s enterprise business. The enterprise segment saw a 10.8% y-o-y increase thanks to higher revenues from managed services and cybersecurity services. Both segments recorded higher project completions, while managed services was lifted by higher revenues from digital infrastructure solutions and data-centre related services.
Meanwhile, consumer average revenue per user (ARPU) remained flat across most segments due to sustained intense market conditions. Entertainment ARPU saw a growth, improving to $46 from $44 due to the cessation of tactical promotions, as well as the successful cross- and up-selling of higher ARPU bundled plans.
Broadband ARPU was stable at $34 and postpaid ARPU dropped to $30 from $32 due to growing SIM Only subscribers, partially mitigated by roaming growth.
Excluding contribution from D’Crypt, which the group has completed the divestment in February, earnings would have been 8.7% higher y-o-y at $83.3 million, while revenue would have been 1.0% higher y-o-y at $1.1 billion.
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Comparing against the group’s full-year guidance for FY2024, 1HFY2024 service revenue growth of 2.4% was in line with the guided “at least 1% to 3%” y-o-y growth range. Service Ebitda margin at 22.8% was in line with the “approximately 22%” guidance.
Capex commitment including investments for 1HFY2024 was 7.7%, lower than the guided range of between 11% and 13% of total revenue for the full year.
During its results briefing, Nikhil Eapen, CEO of StarHub says that capex commitment for the group’s DARE+ transformation is expected to finish by 2025. “By 2025, we would have finished most of the DARE+ expenditure. Next year, we will be the first hybrid multi-cloud telco in the world,” says Eapen.
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"We will also have completed our transformation spend, so we will stop spending money and we will move forward to extracting cost savings by harvesting and decommissioning legacy platforms and driving digital efficiencies," adds Eapen.
And from 2025 onwards, the group expects to see cost savings and cost efficiencies coming in from the DARE+ transformation.
The group has declared an interim dividend of 3.0 cents. It has provided a dividend guidance of at least 6 cents per share in dividends for FY2024 and remains committed to its dividend policy.
StarHub’s free cash flow stands at $101.6 million, which the Eapen reiterated that will be used to pay out dividends, as well as to use for the group’s organic and inorganic growth opportunities.
While there has been market chatter on the group’s being a potential candidate to acquire M1 or to lead a merger within the telco industry, Eapen has declined to comment on the matter due to its speculative nature. But he reiterated that the group is ready for a consolidation.
“With the new growth platforms we have built and armed with our strong balance for financial flexibility, we are well-positioned to proactively refine our tactical and strategic thrusts to compete effectively and aggressively in the markets we operate in, enabling us to drive organic growth in new markets and segments. We are determined to create long-term value for all stakeholders as Singapore’s leading digital platform player,” he adds.
Shares in StarHub closed at $1.29 on Aug 14.
