StarHub's 1HFY2022 earnings fall 10.3% y-o-y to $60.9 mil on higher operating expenses

For the period, StarHub is declaring an interim dividend of 2.5 cents per share, in line with its earlier guidance.

StarHub has reported earnings of $60.9 million for the 1HFY2022 ended June, 10.3% lower than the earnings of $67.9 million in the year before.

The lower earnings were mainly due to the higher operating expenses and lower other income.

During the period, operating expenses increased by 10.5% y-o-y to $967 million due to higher cost of sales, other operating expenses, cybersecurity services and regional ICT (or information communications technology) services.

The lower earnings were also attributable to the lower other income, which fell by 36.6% y-o-y to $4.1 million due to the lower jobs support scheme (JSS) payouts and recovery of tunnel fees.

These more than offset the 8.7% y-o-y growth in revenue of $1.06 billion for the 1HFY2022.

The overall revenue growth was attributable to higher contributions from StarHub’s mobile, broadband, entertainment and enterprise business segments, while offset by lower sales of equipment.

The higher contributions were attributable to higher postpaid revenue, the consolidation of MyRepublic Broadband, higher subscription revenue achieved that also lifted average revenue per unit (ARPU), and the expansion of both the Pay TV and over-the-top (OTT) subscriber base.

In addition, the consolidation of JOS Singapore and JOS Malaysia under regional ICT services and higher revenues from cybersecurity services led to the higher revenue.

Revenue from sales of equipment fell mainly due to the lower volume of handsets sold.

Earnings per share (EPS) for the period fell by 10.9% y-o-y to 3.3 cents on a fully diluted basis.

For the period, StarHub is declaring an interim dividend of 2.5 cents per share, in line with its earlier guidance to distribute the higher of 5.0 cents per ordinary share for FY2022 or 80% of net profit attributable to shareholders.

The dividend to be proposed for 2HFY202022 and the medium term will be largely based on the progress and outcomes generated from the group’s DARE+ initiatives, medium- to long-term investment requirements, and macroeconomic factors, says StarHub in its Aug 4 statement.

StarHub had launched the second phase of its digital transformation journey, called DARE+, last November. DARE+ will enable StarHub’s “Infinity Play” model where it offers a seamless service of connectivity, OTT streaming entertainment, cloud gaming and digital solutions.

In its results briefing, StarHub CEO Nikhil Eapen mentioned that the reason for the drop in earnings this year was due to the group front loading its expansion costs. As previously announced by the group, it is embarking on its DARE+ transformation where it focuses on growth in all areas.

StarHub's latest acquisition of MyRepublic's Singapore broadband business and its secured rights to broadcast the English Premier League (EPL) for the next six years are just some of its plans in its DARE+ transformation. The group is also looking into the use of cloud to upgrade its business processes, allowing cloud to make the business more scalable.

While Eapen expects operating expenses (opex) to remain high for FY2022, he notes that the group has so far met or exceeded its expectations and he expects efforts the DARE+ transformation to contribute meaningfully after FY2022.

In a bourse filing, Eapen added that the group is “steadily executing on DARE+ and solidifying and improving key indicators across our businesses despite sustained market competition”.

“In the coming 2HFY2022, we expect to achieve further milestones in our digital engagement and cloud-based platforms that will accelerate Infinity Play”.

As at June 30, cash and cash equivalents stood at $718.9 million.

Shares in StarHub closed flat at $1.26 on Aug 4.

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