For the nine-month period ending Sep 30, 2022, StarHub&rsquo s net profit was down 18.4 per cent on year to S$88.3 million, while its total revenue was 10.6 per cent higher, at S$1.6 billion. 

 

MAINBOARD-LISTED telco StarHub : CC3 -0.94% reported on Wednesday (Nov 9) a 32 per cent year-on-year decline in net profit for the third quarter, even as total revenue rose 14.2 per cent.

 

Net profit for the three months ending Sep 30, 2022 fell to S$27.4 million from S$40.2 million in the year-ago period. The net profit for the third quarter was also 12.3 per cent lower than the net profit of S$31.2 million it reported for Q2 FY 2022.

 

The weaker profits came despite stronger topline figures, with total revenue for Q3 FY 2022 rising 14.2 per cent on year to S$590.8 million. StarHub noted in its business update that service revenue had grown 15.5 per cent on year to S$482.9 million for Q3 FY 2022, which came from higher contributions across all segments.

 

However, the telco also had recorded higher operating expenses, which amounted to S$547.1 million in Q3 FY2022, up from S$456.2 million in the year-ago period.

 

The company said the lower profits were due to higher staff costs, marketing and promotions (a &ldquo one-off expense&rdquo relating to the Premier League), repairs and maintenance (including Dare+ investments relating to network and IT transformation), and occupancy costs.

 

Excluding &ldquo one-off expenses&rdquo for Premier League and Dare+ investments, net profit for the third quarter would have been 19.8 per cent lower year on year at S$32.3 million, the company said. 

 

Dare+ refers to the building of the company&rsquo s 5G network and other IT expenditures as part of its five-year growth roadmap launched last November.

 

The net profit figures fell short of expectations from Bloomberg&rsquo s poll of three analysts, but revenue figures beat expectations. Net profit had been expected to come in at S$33 million, while revenue was expected to come in at S$569 million for the quarter.

 

StarHub chief financial officer Dennis Chia said that while macroeconomic headwinds have led to declines in the company&rsquo s profitability, it is taking steps to manage both energy and staff costs.

 

Firstly, he said, the company is looking to reduce its absolute power usage and lock in utility rates, in a way similar to how it hedges its foreign exchange risk.

 

Secondly, Chia said, the company is looking to see how it can operate and run its business model more efficiently.

 

&ldquo This is an effort that we are undertaking as we become more of an integrated telco, and we look at becoming more of a technology player ...

 

&ldquo There will be re-allocation of investments and resources but at the same time, we will look to see how we can do that to manage the staff cost increases as well and look to see how we can invest in this to generate the right returns,&rdquo he said.

 

The company also said that there are no immediate plans for job cuts, and that it will continue to &ldquo exercise prudence in managing headcount and staff costs&rdquo .

 

As for the Premier League business, StarHub head of consumer Johan Buse said that it will take time to grow it, and that the entertainment segment as a whole remains profitable.

 

&ldquo In the total scheme of things, the EPL did not have a significant impact this quarter... It will take time to grow the business, now that it&rsquo s been two months down the road, actually,&rdquo he said.

 

For the nine-month period ending Sep 30, 2022, StarHub&rsquo s net profit was down 18.4 per cent on year to S$88.3 million, while its total revenue was 10.6 per cent higher, at S$1.6 billion.

 

StarHub noted that its service revenue had also grown 13 per cent on year during the first three quarters of FY2022, reaching S$1.4 billion, which is ahead of prior guidance offered for FY 2022 of at least 10 per cent growth.

 

It added that its service earnings before interest, taxes, depreciation and amortisation (Ebitda) margin was 23.2 per cent for the first nine months of 2022, which was also higher than the earlier guidance of &ldquo at least 20 per cent&rdquo .

 

StarHub has raised its service revenue guidance for FY2022 to 12-15 per cent growth. It reiterated its service Ebitda margin guidance of at least 20 per cent.

 

In a separate bourse filing, StarHub announced that its chairman Terry Clontz will retire on Dec 31, 2022. He will be replaced by Olivier Lim on Jan 1, 2023.

 

Clontz has served the company for 23 years as its founding president and chief executive officer. He was appointed chairman in July 2015.

 

Lim currently serves as non-executive chairman of Certis Cisco Security and PropertyGuru. He is also the lead independent director of DBS Group Holdings and DBS, as well as a non-executive director of Raffles Medical Group. He was named chief financial officer of the year in The Business Times Singapore Corporate Awards 2007.

 

Said Clontz: &ldquo Now, I am pleased to pass the baton over to the trusted hands of Olivier, who is very seasoned and able. He is the right person to lead StarHub into its new stage of growth.&rdquo