StarHub FY14 revenue inches up 1%, driven by equipment sales

  • 1% dip in service revenue and 17% plunge in broadband revenue
  • Higher take-up of enterprise solutions, and data and Internet services
StarHub FY14 revenue inches up 1%, driven by equipment sales

STARHUB Ltd announced that total revenue for 2014 edged up 1% to S$2.36 billion thanks to higher revenue from the sales of equipment, driven by strong demand for the new iPhones, but the telco giant also saw a 1% dip in service revenue and a 17% plunge in broadband revenue.
 
In announcing its results for the fourth quarter (Q4) and full year ended Dec 31 2014, StarHub said total revenue in Q4 increased 5% year-on-year (YoY) to S$647.4 million.
 
For the quarter, the Group’s EBITDA (earnings before interest, tax, depreciation and amortisation) was higher by 10% YoY at S$192.4 million and 1% higher for the full year at S$747.9 million. EBITDA margin as a percentage of service revenue was 33.8% for the quarter and 33.7% for the full year.
 
[S$1 = US$0.74]
 
In Q4 2014, net profit after tax was at S$94.2 million and free cash flow was at S$48.7 million.
 
Compared with a year ago, net profit after tax increased 10% YoY for the quarter but decreased 2% for the full year to S$370.5 million. Free cash flow increased 208% YoY for the quarter and 14% for the full year.
 
Cash capital expenditure (capex) was at S$86.1 million for the quarter and at S$321.6 million for the full year, or 6% higher YoY, StarHub said.
 
The higher capex included a payment of S$40 million for 4G (Fourth Generation) spectrum rights, it added.
 
Financial highlights
 
Service revenue for the quarter was higher by 1% YoY at S$569.2 million but lower by 1% for the full year at S$2.218 billion.
 
Mobile revenue increased 3% YoY for the quarter and was stable for the full year at S$320.5 million and S$1.248 billion respectively.
 
Compared with a year ago, post-paid ARPU (average revenue per user) increased by S$2 to S$71 for the quarter. For the full year, it was lower at S$69.
 
Prepaid ARPU was also higher by S$2 to S$19 for the quarter and lower by S$1 to S$17 for the full year. StarHub attributed the lower pre-paid ARPU to lower voice usage.
 
Pay TV revenue was stable YoY for the quarter but increased 1% for the full year to S$100.1 million and S$389.7 million respectively. The increase was mainly due to higher subscription revenue from a larger customer base.
 
For the quarter and full year, Pay TV ARPU was at S$52. The customer base was higher at 542,000 households and the average monthly churn was 0.8% for the quarter.
 
Broadband revenue decreased 16% to S$47.7 million for the quarter compared with a year ago. Full year revenue was 17% lower at S$201.9 million.
 
There was an S$8 ARPU decrease YoY for both the quarter and full year, despite a 5% increase YoY in its residential broadband customer base, ending the quarter with 469,000 customers.
 
The revenue decrease was due to price competition which lowered the subscription revenue from re-contracts and new customers. The average monthly churn for the quarter was lower at 0.8% thanks to retention programmes and promotional service bundles, StarHub said.
 
Fixed network revenue increased 4% YoY for the quarter and 3% for the full year. For the quarter, data and Internet services revenue, which make up about 85% of the fixed network revenue, increased by S$5 million to S$86.6 million from a year ago.
 
The increase was due to higher take-up of enterprise solutions and its data and Internet services, StarHub said.
 
Voice services revenue decreased 9% YoY for the quarter to S$14.3 million as a result of lower local voice services revenue impacted by price erosions and market competition, and reduced IDD usage. For the full year, voice services revenue was S$57.4 million, or 11% lower.
 
The number of triple services households grew to 242,000 households, after the quarter’s net adds of 4,000 households, an increase of 6% compared with a year ago.
 
StarHub FY14 revenue inches up 1%, driven by equipment salesThe total number of ‘hubbing’ households with at least one StarHub service totalled 774,000. The number of households taking two or more StarHub services increased to 60% as at Dec 31.
 
“We saw healthy growth in our customer base across all lines of business even though competition was intense. The low churn rates across our businesses bear testament to our effective and proactive customer retention initiatives,” said chief executive officer Tan Tong Hai (pic).
 
“Our Hubbing strategy has served us well. Looking ahead, we aim to further integrate our Hubbing services to address the convergence of our customers’ work and lifestyle needs,” he added.
 
Outlook for 2015
 
Based on the current outlook, and barring any unforeseen circumstances, StarHub said it expects 2015 service revenue to grow in the low single-digit range and group EBITDA margin to be about 32% of service revenue.
 
For 2015, progressive payments towards the construction of the MediaHub project will be made. Excluding these payments, it expects its capex payments in 2015 to be about 13% of total revenue.
 
For 2015, StarHub also intends to maintain its annual cash dividend of 20 cents per ordinary share.
 
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