10 May 2007

StarHub's Results For The First Quarter Ended March 2007

Singapore, 10 May 2007 – StarHub today announced a net profit of S$70.0 million for the quarter ended 31 March 2007, a 14% increase from S$61.4 million recorded a year ago. Excluding the charge of S$12.1 million due to the impact of the tax rate change, the net profit after tax would have been $82.1 million, a 34% improvement year-on-year (Y-o-Y). Group operating revenue grew 11% at S$472.7 million, from S$426.8 million in 1Q-2006. Fully diluted EPS was up 32% at 3.74 cents per share over the same period in 2006.

The Group’s EBITDA expanded 24% to S$157.7 million, compared to S$127.5 million Y-o-Y. EBITDA margin as a percentage of service revenue was at 35.0%, 330 basis points higher than last year’s 31.7%. Free cash flow per fully diluted share surged 284% to 7.53 cents versus 1.96 cents in 1Q-2006. Capital expenditures were S$24.1 million for the three months.

Comparing the Y-o-Y growth of each business unit, all four lines of business continued to contribute strongly to the revenue growth. The Fixed Network business was the top growth performer this quarter increasing 16%, driven mainly by 22% growth in the Data & Internet business. Broadband revenue grew 15% due to a larger customer base and a higher ARPU. Mobile maintained its growth momentum at 11% while Cable TV registered 9% growth.

Financial Highlights

 

S$ million

Quarter ended 31 March

2007

2006

% Change

Revenue

472.7

426.8

10.8

Service Revenue

450.3

402.2

12.0

EBITDA

157.7

127.5

23.7

Profit from operations

102.8

76.8

33.9

Profit before tax

97.8

76.1

28.6

Taxation

(27.8)

(14.7)

(89.8)

Profit attributable to shareholders

70.0

61.4

13.9

FCF / Shares (Diluted) (Cents)

7.53

1.96

284.1

1Q-2007 Y-o-Y Financial & Business Highlights

  • Mobilerevenue increased 11% to S$242.4 million from S$217.9 million. Post-paid mobile services revenue climbed 5% to S$181.3 million while pre-paid mobile services revenue grew 34% to S$61.1 million. Post-paid ARPU increased 2% to S$71, while pre-paid ARPU rose 14% to S$26. Mobile customer base grew 9% to about 1.59 million. There were 788,000 post-paid customers, of which 217,000 are using 3G handsets and are on 3G plans, and 798,000 pre-paid customers. For the quarter, Singapore’s mobile market penetration was at 106.8%.
  • Cable TV revenue increased 9% to S$79.2 million from S$73.0 million. ARPU expanded S$1 to S$48. Average monthly churn rate remained low at 1.1%. Cable TV customer base grew 8% to 490,000, registering a household penetration of 43.6% compared to 40.5% the year before. The number of customers taking the Digital Cable services climbed 55% to 342,000 households, representing 70% of the total Cable TV customer base.
  • Broadband revenue continued to grow strongly at 15% to S$60.4 million compared to S$52.5 million previously. ARPU increased S$1, as a result of a slightly higher percentage of customers signing on to the higher subscription plans. Broadband subscription-based customers jumped 14%, closing the quarter with about 329,000 customers.
  • Fixed Network revenue increased 16% to S$68.2 million from S$58.9 million. This was assisted by a higher subscription of domestic and international lease circuits services.
  • During the quarter, the percentage of total Hubbing households who subscribed to any two or more StarHub services crossed the half-way mark to 50.9%. During this period, the total number of hubbing households subscribing to at least one service also inched 4% to 745,000 households.

"Despite the challenging competitive environment in Singapore, we have delivered double-digit growth in revenue, EBITDA and earnings each quarter since our IPO in 2004. To date, we have returned about S$1.1 billion to shareholders through dividends and capital reduction. With our second capital reduction this year, a cumulative total of 78 cents per share will be returned to shareholders in less than three years," said Mr Terry Clontz, President and CEO of StarHub.

"Our foundation strategy of Hubbing and responsibly managing the drivers of cashflow are proving to be the winning formulae for value creation in a highly penetrated market," added Mr Clontz.

Outlook for FY2007

Based on the current outlook, barring any unforeseen circumstances and changes in economic and market conditions, we reiterate our earlier guidance 2007 of high single-digit revenue growth. We expect EBITDA margin for the full year to be about 34% of service revenue, and full year’s cash capital expenditure as a ratio of operating revenue for 2007 to not exceed 14%.

In view of the projected profitability and cash flow generation in 2007, and our commitment to return surplus cash to our shareholders, we intend to pay a minimum annual cash dividend for financial year 2007 of 14.0 cents per ordinary share.

For more details on the Group's performance for 1Q-2007 and outlook for FY2007, please visit www.starhub.com/ir. Materials available at this website include the investor presentation and unaudited results for the first quarter ended 31 March 2007.

"Some of the statements in this news release constitute "forward-looking statements" that do not directly or exclusively relate to historical facts. These forward-looking statements reflect StarHub Ltd’s current intentions, plans, expectations, assumptions and beliefs about future events and are subject to risks, uncertainties and other factors, many of which are outside StarHub Ltd’s control. Important factors that could cause actual results to differ materially from the expectations expressed or implied in the forward-looking statements include known and unknown risks. Because actual results could differ materially from StarHub Ltd’s current intentions, plans, expectations, assumptions and beliefs about the future, you are urged to view all forward-looking statements contained in this news release with caution."