Singapore, 27 October 2005 – StarHub Ltd (“StarHub” or “The Group”) today reported a net profit of S$148.1 million for the nine months ended 30 September 2005. This compares favourably to a net loss of S$48 million in the prior year’s corresponding period. The Group’s operating revenue is S$1.16 billion, up 16% from a year ago. For the third quarter ended 30 September 2005, StarHub’s net profit totalled S$65.1 million, compared to a net loss of S$1.4 million in 3Q last year. Operating revenue for the quarter grew 17% to S$398.3 million, versus S$339.6 million in 2004.
As a result of broad-based strength across the Group’s business portfolio, year-to-date EBITDA grew by a robust 46% to reach S$342.7 million while EBITDA margin as a percentage of service revenue grew seven percentage points from 24.7% to 31.4%. For the quarter ended 30 September 2005, EBITDA grew 40% to S$128.1 million from S$91.6 million previously, while EBITDA margin as a percentage of service revenue expanded from 28% in 3Q 2004 to a new high of 34% for the latest quarter.
The Group’s depreciation rates changes for certain assets and cessation of goodwill amortization since January 2005 have also favourably impacted its bottom line. For the quarter, the impact arising from these changes totaled S$21 million and the year-to-date favourable impact was S$78 million.
Year-to-date, free cash flow increased 49% to S$175.6 million. This favourably measures up against S$117.6 million in the prior year period. StarHub’s free cash flow for 3Q 2005 was S$80.5 million, relatively unchanged when compared to S$81.4 million in 3Q 2004.
During the quarter, on a year-on-year basis, the Group’s three major strategic lines of business recorded double-digit revenue growth. Broadband continued to grow the fastest at 38% due to a growth in customer base and an increase in ARPU. Driven by a growing customer base and healthy ARPU numbers, Mobile services reported a 16% increase in revenue, while Cable TV recorded an 18% increase in revenue, through an expanding customer base and higher ARPU.
For the quarter ended 30 September 2005, earnings per share on a fully diluted basis were 3.03 Singapore cents, up from a negative 0.07 Singapore cents reported in the prior year.
Financial Highlights
S$ million | Quarter ended 30 September | Nine months ended 30 September | ||||
2005 | 2004 | % Change | 2005 | 2004 | % Change | |
Revenue | 398.3 | 339.6 | 17.3 | 1,155.6 | 994.1 | 16.2 |
Service Revenue | 378.2 | 326.2 | 16.0 | 1,091.9 | 946.7 | 15.3 |
EBITDA | 128.1 | 91.6 | 39.9 | 342.7 | 234.1 | 46.4 |
Profit / (loss) from operations | 79.9 | 6.2 | @ | 188.7 | (15.3) | nm |
Profit / (loss) before tax | 78.0 | 2.9 | @ | 182.6 | (25.6) | nm |
Taxation | (13.0) | (4.4) | (197.3) | (34.5) | (22.4) | (53.8) |
Profit attributable to shareholders | 65.1 | (1.4) | nm | 148.1 | (48.0) | nm |
Free Cash Flow | 80.5 | 81.4 | (1.1) | 175.6 | 117.6 | 49.3 |
Note: nm = Not meaningful / @ = indicates more than +/- 300%
First Nine Months 2005 Financial Highlights
· Contributions to the revenue mix from Mobile, Cable TV, Broadband, Fixed Network Services and Sales of Equipment were 53%, 17%, 11%, 14% and 5%, respectively.
· Mobile revenue grew 17% to S$609.4 million from S$520.5 million last year, as a result of a 23% increase in customers. Post-paid mobile services revenue rose 9% year-on-year to S$491.9 million, accounting for 81% of the Mobile revenue mix. Pre-paid mobile services revenue grew 71% to S$117.5 million. Post-paid ARPU held steady at S$71, while Pre-paid ARPU grew 8% to S$24. Non-voice services contributed 16% of blended ARPU mix. Churn fell to 0.9%, compared to 1%, a year ago.
· Cable TV revenue grew 18% to S$192.2 million due to the larger customer base and 11% growth in ARPU to S$45 from S$40 previously. Average monthly churn rate remained relatively unchanged at 0.9% from 0.8% a year ago.
· Broadband continued to register the strongest growth at 43% to S$128.2 million compared with S$89.8 million previously. This was achieved as a result of a larger customer base and ARPU which grew 6% to a healthy S$57, compared to ARPU of S$54 for the year-ago period. Churn fell to 1% from 1.1%, a year ago.
· Fixed Network revenue slipped 7% to S$162.1 million. This was due to the de-emphasis of low margin international voice transit business.
First Nine Months 2005 Business Highlights
· Mobile customer base grew 23% to 1,328,000 customers. StarHub’s mobile market share is estimated to be around 32%. We launched our 3G services in end April, and by the end of September 2005, our 3G customer base has grown to 22,981.
Ø GPRS traffic grew 74% to 2,055.7 gigabytes, while MMS traffic grew 61% to 11 million messages as at 30 September 2005.
· Cable TV customer base grew 9% to 433,000 as at 30 September 2005, amounting to a household penetration of 39% compared to 36% in the prior year period. The customer base for Digital Cable services saw a more than four-fold increase compared to the previous period, ending the first nine-month period with about 159,000 customers. This represented almost 37% of the total Cable TV customer base, up from 9% previously.
· Residential Broadband subscription-based customers jumped by almost a third, closing the first nine months of 2005 with 261,000 customers, compared to 199,000 as at 30 September 2004. Based on the IDA statistics (which includes pre-paid and wholesale customers), the total Broadband customers represents 49.7% residential broadband market share, as at 31 August 2005, an increase from 45.9%, as at 30 September 2004. The monthly churn rate was maintained at a low 1%.
· StarHub’s unique triple play and Hubbing strategy continued to gain good traction. The percentage of StarHub customers who subscribed to any two or more services rose from 41% a year ago to 46%. During this period, the total number of households subscribing to at least one service also grew 6% to 698,000 households.
“We continued to grow the top line while delivering higher operating margins. StarHub recorded broad-based growth across its Mobile, Cable TV and Broadband units in 3Q2005. Based on 3Q results and our expectations for 4Q, we are upgrading our full year guidance for revenue growth from the low-teens to the mid-teens, and we now anticipate that EBITDA margin will be around 31%.
Our Hubbing strategy remains central to our plans for revenue growth and EBITDA margin expansion. We believe that we offer more value and the broadest range of innovative services in Singapore. Increasingly, customers recognise this about StarHub, which has helped to increase the number of households subscribing to multiple StarHub services from 269,000 to 320,000 as at end-September 2005.
In keeping with our plans to reward our shareholders quarterly, StarHub will pay a second interim dividend of 2.5 cents per ordinary share on 25 November 2005,” said Mr Terry Clontz, President and CEO, StarHub.
Outlook for Year 2005
Mobile penetration in Singapore presently stands at about 98%, with the market share structure and ARPU values stabilizing. All three operators have launched 3G services in the first half of 2005. StarHub plans to launch NTT DoCoMo’s i-mode services across its 2.5G and 3G networks in the fourth quarter this year. However, to date, the take-up of mobile data services has not had a material impact on our results, and is not likely to be meaningful until late 2006 at the earliest. It is also anticipated that the pre-paid market in Singapore may be affected by new registration requirements, which will take effect from 1 November 2005.
While the cable TV market faces the potential entry of IPTV operators to the Singapore market, StarHub continues to further strengthen its position in the market. Year-to-date, StarHub has announced new channels and value-added services such as Karaoke TV and Demand TV to increase its Cable TV offerings and to further penetrate various customer segments in the market.
On the residential broadband front, it is expected that there will be aggressive marketing and promotions by all operators in the lead-up to the festive season.
Based on the current outlook, and barring any unforeseen circumstances and changes in the economic and market conditions, StarHub expects the 4Q2005 results to factor in seasonally higher marketing and sales costs. Consequently, we expect margins to be lower in the fourth quarter than that experienced in 3Q2005.
The Group expects operating revenue for FY2005 to show year-on-year increase of around the mid-teens. EBITDA margin as a percentage of service revenue, is expected to be around 31%, while Capex, as a percentage of operating revenue, is targeted to be in the mid-teens.
For more details on the Group's performance for the nine months ended 30 September 2005 and outlook for FY2005, please visit www.starhub.com/ir. Materials available at this website include the presentation and unaudited results for the third quarter ended 30 September 2005.
