Next in line to release its third quarter 2023 (3Q 2023) earnings is StarHub Limited (SGX: CC3).
The telco is executing its DARE+ initiatives to drive cost savings and boost its top line.
It was a sparkling set of financial results for the group with both top and bottom line increases for the quarter.
Here are five aspects of StarHub’s results that investors need to know about.
1. An improvement in revenue and net profit
For 3Q 2023, StarHub reported a 5.3% year on year rise in revenue to S$622.1 million with growth across most of its segments coupled with the consolidation of MyRepublic Broadband since 2Q 2022.
Service revenue increased by 8.9% year on year to S$526 million.
Net profit climbed 36.5% year on year to S$37.3 million, helped by higher operating profit and lower finance costs.
For the first nine months of 2023 (9M 2023), StarHub’s total revenue increased by 4.8% year on year to S$1.7 billion.
Net profit improved by 29.1% year on year to S$114 million.
2. Top-line improvements for three out of four divisions
The telco saw healthy top-line growth across three out of four of its divisions.
Its Mobile division revenue rose 7.2% year on year to S$153.3 million, powered by higher postpaid revenue.
Overall average data usage hit 17.5 GB in 3Q 2023, 22.4% higher than the 14.3 GB registered a year ago.
The Entertainment division’s revenue inched up 2.4% year on year to S$56.7 million.
The division enjoyed higher subscription revenue and saw better commercial TV and advertising revenue driven by the English Premier League (EPL).
StarHub’s Enterprise division was the star performer with a 14.8% year-on-year rise in revenue to S$253.6 million. More on this division later.
The only division that registered a fall in revenue was Broadband, which saw revenue dip 1.9% year on year to S$62.4 million.
The group attributed this to intensifying market competition but 9M 2023 managed to eke out a 4.2% year on year gain in revenue to S$187 million with higher subscription revenues.
3. A mixed bag for ARPU
Moving on to StarHub’s average revenue per user (ARPU), it was a mixed bag for the telco.
For its Mobile division, 3Q 2023’s postpaid ARPU improved slightly from S$31 to S$32 because of higher roaming, value-added service (VAS), and voice subscription revenue.
The telco’s postpaid subscriber base also rose from 1.55 million in 3Q 2022 to 1.58 million.
Prepaid ARPU, on the other hand, declined slightly year on year to S$7 from S$8 due to increased promotions.
The Mobile division’s churn rate remained low at 1% for the quarter but was slightly elevated compared with the prior year’s 0.8%.
ARPU remained stable for the Broadband division at S$34 but the subscriber base grew from 576,000 a year ago to 579,000 for 3Q 2023.
The Entertainment division’s ARPU enjoyed an uplift from S$41 in 3Q 2022 to S$45 in the current quarter because of the EPL.
However, the better ARPU was offset by a declining subscriber base that fell from 387,000 in the prior year to 347,000 as certain promotions were discontinued.
4. Enterprise business boosted by cybersecurity
StarHub’s Enterprise division performed well for 3Q 2023 with 9M 2023 also seeing a 6.5% year-on-year rise in revenue to S$650.5 million.
For 9M 2023, cybersecurity services made up the lion’s share of revenue at 38% with data and internet coming in second at 28%.
Regional ICT services came in third at 20% of the revenue pie.
Cybersecurity services saw its revenue surge by 45.1% year on year to S$115.1 million for 3Q 2023 due to higher project recognition.
For 9M 2023, this division saw its revenue climb 22.1% year on year to S$244.1 million.
However, this sub-segment recognised an operating loss of S$5.1 million because of lower Other Income and continued investments to support the business.
As for StarHub’s two other major sub-segments within the Enterprise division, network solutions and regional ICT services registered year-on-year revenue declines of 3.2% and 0.1%, respectively, for 3Q 2023.
5. Ensign rights extended
StarHub announced that it will retain its Ensign assigned rights for another two years till 4 October 2025.
With this announcement, the telco’s effective interest in Ensign will remain at 55.73%.
To recap, Ensign Infosecurity is a joint venture formed between StarHub and Temasek Holdings back in September 2018.
A mechanism is in place for StarHub to retain these rights past October 2025 either through a further extension of the termination date, or transfer of the assigned rights to the telco for a consideration to be determined.
Cybersecurity remains core to StarHub and its DARE+ initiative and Ensign will help to drive secure multi-cloud solutions to enable Smart City use cases for its Enterprise customers.
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Disclosure: Royston Yang does not own shares in any of the companies mentioned.