23 February 2005

The listing of the shares of StarHub Ltd on the SGX-ST was sponsored by Credit Suisse First Boston (Singapore) Limited and UBS AG, acting through its business group, UBS Investment Bank.


·        Operating Revenue Grew 21%, To S$1.36 billion

·        EBITDA Increased 60%, To S$325.1 million

·        Free Cash Flow Surged 174%, To S$117.9 million

·        Group Expects To Be Profitable And To Recommend  A Maiden Dividend for FY2005


Singapore, 23 February 2005 – StarHub today reported its strongest fiscal year performance since inception, with its operating revenue for the full year ended 31 December 2004 increasing 21% year-on-year to S$1.36 billion.For 4Q2004, revenue grew 20% to S$361.1 million compared to the same period last year.


All lines of business recorded growth, with Broadband growing the fastest at 37% and Mobile continuing its growth momentum at 27% year-on-year.


As a result of higher revenue and improved operating efficiencies, the Group’s EBITDA improved significantly by 60% to an all-time high of S$325.1 million. EBITDA as a percentage of service revenue margin grew to 25% compared to 19% one year earlier. Quarter-on-quarter, EBITDA grew 74% to S$89.3 million, while EBITDA margin as a percentage of service revenue rose from 18% to 26%.


Capital Expenditures remained at the same level as 2003 at S$221 million. CAPEX as a percentage of operating revenue was 16% in 2004, as compared to 20% in 2003.


The strong EBITDA performance delivered record free cash flow of S$117.9 million. This was an increase of 174% over the previous year. StarHub’s free cash flow for the quarter was S$0.3 million compared to S$14.8 million previously. This was attributed to higher CAPEX in the fourth quarter due to invoices for work completed earlier in the year coming due near year-end.


The Group registered a full year operating loss of S$14.5 million in FY2004, reducing losses by S$115.3 million from an operating loss of S$129.8 million in FY2003. StarHub’s net loss for the fourth quarter decreased by a significant 97% to S$0.9 million, compared to S$31.4 million previously.


The Group’s net after tax loss for FY2004, at S$52.4 million, was 14% higher compared to the previous year. This was due to a one-time non-cash tax debit adjustment of S$15 million in 1Q2004, arising from a change in the corporate income tax rate, and an IDA compensation credit of S$90 million in 1Q2003. Net loss for 4Q2004 improved 83% quarter-on quarter to S$6.2 million.


Financial Highlights



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FY2004 Financial Highlights

·         Contributions to the revenue mix from Mobile, Cable TV, Broadband, Fixed Network Services and Sales of Equipment were 52.6%, 16.5%, 9.3%, 16.6% and 5.0%, respectively.

·         Mobile revenue grew 27% to S$713 million from S$560 million, as a result of a 33% increase in our customer base to 1.16 million. Driven by customer growth, post-paid mobile services revenue rose 21% year-on-year to S$615 million, accounting for 86% of the Mobile revenue mix. Pre-paid mobile services revenue grew 97% to S$98 million. Post-paid ARPU increased by S$1 to S$72, while pre-paid ARPU grew 6% to S$22. Non-voice services contributed 15.5% of blended ARPU mix.

·         Cable TV revenue grew 6% to S$224 million. Overall ARPU for Cable TV was lower at S$41 from S$42 previously, as various promotional discounts were given during 2004 to encourage take-up and retention. Average monthly churn rate fell to 0.8% from 1.0% a year ago.

·         Broadband registered the strongest growth at 37% to S$126 million, compared to S$92 million one year ago. ARPU was S$2 lower at S$54 as a result of promotional discounts given in FY2004. Furthermore, ARPU for 2003 had included the impact of the cable modem rental subscription of S$5. This S$5 rental uplift was removed as customers were fully migrated to the current new plans without modem rental by October 2003.

·         Fixed Network revenue increased 6% to S$225 million, driven mainly by volume growth in Data & Internet services. StarHub’s IDD market share, as a percentage of call minutes, increased to 12.9% from 11.5% a year ago.


FY2004 Business Highlights

·         Mobile customer base grew 33% against the overall Singapore mobile market growth of 11%, representing a 30% mobile market share as at 31 December 2004. StarHub’s share of the market net adds for the year was 74.1%. For 4Q2004, StarHub captured 63.7% of the market net adds, as mobile market penetration reached 92.2% in Singapore.

Ø      GPRS traffic grew 132% to 1,768 gigabytes, while MMS traffic grew 241% to 10.1 million messages as at end December 2004.

Ø      As at 31 December 2004, StarHub has put in place its 3G network and is currently conducting customer trials. StarHub’s 3G service is expected to be launched in the first half of 2005.

·         Cable TV customer base grew 8% to 412,000 as at 31 December 2004, representing a household penetration of 37.4% compared to 35.3% one year ago.  Digital Cable TV customers grew 51% in 4Q2004 to 53,000, compared to 36,000 in 3Q2004. The Cable TV business also recorded an all-time low churn rate of 0.8% for the year.

·         Broadband households jumped 43%, closing the year at 215,000 customers. This represents 46.2% residential broadband market share, an increase from 43.6 % at the end of 30 June 2004. The monthly churn rate was reduced to 1.1% in 2004, from 1.4%, a year ago.

·         StarHub’s Hubbing strategy continues to gain traction. In FY2004, the percentage of StarHub customers who subscribed to any two or more services rose from 35.7% a year ago to 42.1%. During the year, the total Hubbing households also grew 7.2% to 679,000 households.


"We are pleased with our financial and operational results for fiscal year 2004. The StarHub team delivered strong top line growth and margin expansion. In addition, we launched Digital Cable in May, undertook a successful IPO in October, and achieved over 98% 3G mobile coverage in December 2004. We are also delighted to report that more Singaporeans are signing up for the many benefits that our full hubbing portfolio of services offer,” said Mr Terry Clontz, President and CEO of StarHub.


“With a focus to growing our mobile data business, we entered an exclusive agreement with NTT DoCoMo as the first South East Asian country outside Japan to launch i-mode services in Singapore before the end of this year.”


Outlook for Year 2005

On the outlook for FY2005, Mr Clontz said, “Barring any unforeseen circumstances, we are expecting high single digit growth in revenue over FY2004 and EBITDA margin of approximately 27% of service revenue. CAPEX payments for FY2005 should be in the mid-teens of total revenue. In a bid to be more aligned to industry practice, we have revised depreciation rates for certain network assets from 5 years to 8 years life, with effect from 1 January 2005. This will reduce the annual depreciation expense by about S$70 million in the coming year.


The Company expects to be profitable in FY2005 and to recommend a maiden dividend, barring any material adverse event or change in circumstances.”


For more details on the Group's performance for FY2004 and outlook for FY2005, please visit www.starhub.com/ir. Materials available at this website include the investor presentation and audited results for the fourth quarter and full year ended 31 December 2004.