StarHub profit for 1Q11 virtually unaffected by drop in postpaid revenue

The telecom company reported a core profit of S$69.1mln for the quarter despite a 2.4% drop in mobile revenue.

StarHub's S$558.5mln revenue reflected the high base in the preceding quarter, which comprised of stronger year-end acquisition activities and higher product take-ups.

Lower volume sales of smartphones contributed to the smaller 10.4% q-o-q growth in cost of equipment sold but the higher marketing cost crimped EBITDA margin by 142 bps q-o-q to 30.1%.

The seasonally stronger 4Q10 and attractive IDD promotion contributed to weaker mobile revenue q-o-q while pay-tv and broadband revenues were stable.

In a statement, DMG Research said StarHub's management did not disclose the number of fiber customers but said it is running ‘slightly behind’ initial expectations due to rollout delays.

The drop in StarHub's postpaid revenue was traced to higher involuntary churn (lagging effect of dunning earlier) and the termination of data-only plans as more users opt for alternative smart devices such as the iPad which do not require a dongle subscription, coupled with the wider availability of data/voice bundled plans in the market.

Starhub sees the impact from the new Malaysia-Singapore roaming rates as neutral given that the lower roaming
revenue will also correlate with lower roaming cost.

StarHub also disclosed that the third round of discussions with the Media Development Authority (MDA) has just concluded and expects the ruling to be implemented by end-June.

The telecom company said it does not see much of an impact from the ruling-- which only applies to new exclusive content inked after March 2010-- with the bulk of exclusive content locked-in for 2-3 years.

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