StarHub Ltd (SGX: CC3) had a bold vision when it launched its DARE 1.0 transformation program back in October 2018.
The plan is centred around cost savings in a variety of areas and to reduce recurring operating expenditure levels.
Three years later, that program has been a success.
Ending just last month, DARE 1.0 delivered total cost savings of S$270 million, exceeding the group’s target of S$210 million, while also reducing the telco’s operating expenditure level by 15%.
The conclusion of DARE 1.0 sets up the next iteration of StarHub future plans.
StarHub’s management, including its CEO Nikhil Eapen, has unveiled the next iteration of this transformation plan called DARE+ at this year’s Investor Day.
This new plan has equally bold five-year targets and looks set to prepare the telco for its next stage of evolution.
Here are five interesting highlights from this newly-unveiled plan.
1. Bold financial targets
DARE+ now targets to save around S$280 million over the next five years with a series of initiatives to simplify operations and optimise productivity.
Around S$270 million of these savings will be channelled into investments for its digital platform and 5G network to further grow its business.
At the same time, StarHub also expects to gain S$220 million in gross profit growth over the same period.
After deducting required capital expenditures, the group estimates that it can achieve S$80 million per annum in gross profit between 2022 and 2026.
There’s also good news for income-seeking investors as the telco mentioned that dividends may potentially grow.
This news should be a breath of fresh air as StarHub had cut its dividends from S$0.20 back in 2016 to just S$0.05 last year.
2. Differentiation strategy for the consumer division
StarHub has plans to increase the breadth of services for its customers using an all-in-one app.
With the trove of data obtained, the group will then use analytics to tap it for predictive marketing purposes.
StarHub has managed to grow its 5G subscriber base impressively, chalking up a more than eight-fold year on year gain to end the latest quarter at more than 250,000 subscribers.
Mobile revenue and average revenue per user, backed by 5G users, have also been inching up quarter on quarter.
The group partnered with Disney (NYSE: DIS) to provide bundled services including Disney+ along with its broadband and mobile subscriptions.
The plan is to continue to invest in digital capabilities to provide a superior customer experience while providing a buffet of services to whet customers’ appetites.
3. Growing its enterprise division
StarHub’s enterprise division sees good opportunities to grow its top line as it identifies enduring trends such as cloud security, smart cities, and digital solutions.
Ensign, a cybersecurity provider to Singapore government agencies and large corporations, has seen continued growth in its existing markets of Malaysia and Hong Kong while also snagging contracts in new markets such as Brunei, Myanmar and Vietnam.
Prospects look bright as the cybersecurity market in Singapore is projected to continue to grow at 15% per annum.
Ensign plans to launch analytics-enabled security services to the market soon and also venture into new territories such as Australia and the Middle East.
4. StarHub’s 5G vision
5G has opened up new use cases for StarHub such as secure mobile campus networks and facial recognition services.
Using one network, the group can tailor many services for both enterprises and individuals.
Services such as cloud gaming, public safety, augmented reality, and specialised services can be delivered once the network is up and running across the island.
By the end of this year, 75% of Singapore should have 5G coverage and this will extend to the whole island by the end-2022.
There may be future 5G spectrum up for grabs and which are subject to regulatory authority, opening StarHub up to optimisation of its current network.
5. A focus on sustainability
Finally, StarHub remains focused on sustainability as a core pillar of its transformation strategy.
This commitment is similar to what Singapore Technologies Engineering (SGX: S63) had communicated during its Investor Day recently.
The telco will increase its adoption of renewable energy and implement energy reduction methods to reduce greenhouse gas emissions.
It aims to raise renewable energy adoption to 10% in 2022.
StarHub also plans to give back to the community by supporting the Community Chest and Care Corner, as well as offering competitive remuneration and benefits to nurture talent.
For the future, StarHub will consider green financing and also explore the setting of net-zero targets for some facilities, as well as introduce sustainable practices at its Loyang data centre.
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Disclaimer: Royston Yang does not own shares in any of the companies mentioned.