Starhub lower YoY contributions, sequential improvements noted: analyst

The company’s Q4 2020 revenue fell 5% YoY to $579.5m.

Starhub recorded a 5% YoY fall in its Q4 2020 revenue to $579.5m largely due to lower contributions from mobile, pay TV and sales of equipment, partially offset by higher revenues from broadband and enterprise business, according to a research from OCBC Investment Research (OIR).

OIR noted that Starhub’s dividend per share for FY2020 came in at 5 Singapore cents, which was below their expectations of 6 Singapore cents per share.

However, the research team also sees signs of sequential improvement. Whilst service revenue was down 6% YoY, it was up 8% QoQ with cybersecurity increasing 59% QoQ.

“We understand that there appears to be more activity in the enterprise space as businesses prepare for a post-COVID world. We also note that management intends to explore M&A opportunities moving forward to strengthen its enterprise capabilities,” the research team said.

The team added that the management is taking a declining outlook on mobile, assuming the impact of the pandemic on travel remains in 2021. Starhub has also noted accelerating demand for its 5G plans driven by the launches of premium 5G handsets.

OIR believes that improvement in average revenue per user (ARPU) is not implausible as Starhub’s 5G plans are not contributing to stabilising mobile ARPUs sequentially in Q4.

It has given Starhub a “hold” rating with a fair value of $1.32.

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