MAINBOARD-LISTED telco StarHub is still reeling from the impact of the Covid-19 pandemic on consumer demand, which has pushed down third-quarter earnings.

 

Net profit came in lower by 23.3 per cent year on year to S$44.5 million for the three months to Sept 30, according to financial results released on Friday evening.

 

Overall revenue fell by 14.5 per cent to S$489.7 million, while service revenue - which excludes equipment sales - dropped by 10.6 per cent to S$388.7 million.

 

Chief corporate officer Veronica Lai said in a statement that business had " a modest pick-up" in the second phase of Singapore' s three-stage economic reopening, after a quasi-lockdown in the second quarter of the year.

 

" However, our Q3 2020 performance continued to see impact from the ongoing global restrictions on travel, particularly for our mobile business," she added.

 

Peter Kaliaropoulos resigned as chief executive for family reasons, left on Oct 31.

 

Service earnings before interest, taxes, depreciation, and amortisation (Ebitda) margin will likely be weaker in the fourth quarter than in the third, StarHub said, citing continued pressure of border controls on revenue, and a seasonal rise in operating expenses.

 

The group added in its outlook statement that it expects to maintain its earlier guidance for FY2020, which projected a service revenue decline of 10-12 per cent.

 

The core mobile services business tanked third-quarter turnover, with revenue down by 29.4 per cent to S$134.1 million. StarHub attributed the fall to factors such as reduced travel amid the pandemic, which ate into both postpaid and prepaid revenues.

 

Postpaid average revenue per user (ARPU) lost 26.9 per cent year on year to S$29, even as subscribers grew to 1.45 million, from 1.44 million in the year prior.

 

Pay-television revenue fell by 16 per cent to S$47.1 million, with 321,000 households signed up, against 347,000 customers before. Besides the smaller subscriber base, StarHub' s management also blamed the impact of the virus on commercial revenue and advertising, as commercial clients trimmed their expenses.

 

On the bright side, enterprise business services continued to cushion the blow to the top line, posting revenue growth of 11.4 per cent, to S$162 million.

 

But this was supported by StarHub' s fledgling cyber security division, as well as newly acquired regional infocomm technology unit Strateq. Contributions from the tentpole network solutions business, on the other hand, shed 7.7 per cent on the year before.

 

StarHub also noted that its enterprise customers will likely defer their new investments into the next financial year, which " will impact consumption of traditional telco connectivity services until there is greater clarity on the economic recovery" .

 

Meanwhile, broadband revenue rose by 5.5 per cent to S$45.5 million on reduced subscription discounts that boosted ARPUs, even with the number of lines falling to 500,000 as at the end of the quarter, down from 505,000 previously.

 

Dennis Chia, chief financial officer for StarHub, added in a statement that StarHub is looking forward to rolling out its 5G standalone network in the fourth quarter, " and will continue our disciplined approach to capital management" .

 

Free cash flow was S$75.6 million for the quarter, down 29.3 per cent year on year, while net debt-to-Ebitda ratio stood at 1.45 times, against 1.51 times as at Dec 31, 2019.

 

For the nine months, net profit was down by 19.6 per cent, to S$121.9 million, on a 15.8 per cent decrease in revenue, to S$1.45 billion. Service revenue was lower by 11.5 per cent, at S$1.17 billion, in line with the guidance.

 

StarHub, which pays out dividends on a half-yearly basis, last declared an interim dividend of 2.5 Singapore cents for H1 2020. Payouts have been reduced from 4.5 Singapore cents in H1 2019, and eight Singapore cents in H1 2018.