MAINBOARD-LISTED StarHub expects service revenue to be stable year on year in 2021, as the economy and tourism are unlikely to recover " until quite late in the year" from the impact of the Covid-19 pandemic.

 

The outlook, given in a briefing by new chief executive officer Nikhil Eapen, came as the telco on Friday posted a 10 per cent drop in full-year service revenue, to S$1.59 billion.

 

Overall group revenue was down by 13 per cent to S$2.03 billion for the 12 months, while net profit shed 15.2 per cent to S$157.9 million.

 

" The key assumption here is that Covid impacts continue," said Mr Eapen, in his first appearance since joining from Temasek-owned parent company ST Telemedia in January.

 

He warned that the sour mood " cuts across consumer, enterprise and not just mobile but also pay TV" .

 

While StarHub' s growing cyber security arm and new regional ICT service business are poised for growth, these segments will also dilute blended margins. As such, the service Ebitda margin could thin to between 24 and 26 per cent - down from 31.1 per cent in FY2020 - especially with 5G capex set to kick in.

 

Fourth-quarter earnings bucked the pessimism, increasing by 3.5 per cent to S$36.1 million in the three months to Dec 31, 2020. But the government wage subsidies that cushioned StarHub' s other income will taper off this year.

 

That' s even as fourth-quarter turnover decreased by 4.8 per cent to S$579.5 million, dragged down by a 5.5 per cent fall in service revenue.

 

Despite contributions from cyber security and the consolidation of Malaysian ICT provider Strateq, StarHub is - as Mr Eapen suggested - struggling in its core consumer wing.

 

Mobile service revenue lost 27.4 per cent in the quarter to S$138.6 million, shedding 24.3 per cent for the full year. Pay television revenue was also down by the double digits. Broadband was stable on a full-year basis.

 

Post-paid average revenue per user (ARPU) stood at just S$30 - against S$40 at end-2019 - while the number of subscriptions fell to 1.41 million, from 1.45 million before.

 

Johan Buse, head of the consumer business group, framed the trough as " ARPU without roaming" , as international travel is at a standstill amid the pandemic, but told the briefing that " we do expect ARPU levels to probably go back to higher levels once Covid restrictions are behind us" .

 

Otherwise, the increasing popularity of cheaper SIM-only plans has also eroded the " healthy uplift and very encouraging uptake" from 5G plans, which are now priced at a premium of S$5 to S$10 over 4G services.

 

Still, the StarHub board pressed on with a final dividend of 2.5 Singapore cents a share - taking the full-year payout to five Singapore cents a share, in line with earlier guidance.

 

It expects to pay at least the same sum in FY2021 - taking into account " the ongoing effects of Covid-19, the group' s ongoing investments in, and returns from transformation initiatives" .

 

Mr Eapen lauded his predecessor' s " great and ongoing transformation plan" when asked how his vision will compare with former CEO Peter Kaliaropoulos' s strategy.

 

" We want to expand our customer engagement footprint over the years... in Singapore and regionally, and continue to do M& A (mergers and acquisitions) that brings data-driven growth," he said.