Starhub

The Edge online report on the Starhub 1H result.

Up to now, base on both results from M1 and Starhub, the worst casualty of the MyRepublic 1Gbps deal, is the Starhub broadband business. M1 still gained positively albeit slower growth. SingTel's 1Q (till end-June) report is yet to announce.

(vested in M1, not in SingTel and Starhub)

StarHub 2Q net profit falls 6.3% to $94.3 mil

StarHub said it posted a 6.3% decrease in net profit to $94.3 million for the second quarter ended June 30.

Total revenue for the quarter was at $576 million, 2% lower compared to a year ago. On a half-year period, revenue was at $1.1 billion.

Mobile services revenue decreased 1% for the quarter to $310.3 million and was stable for the half-year at $616.2 million. Pay TV revenue increased 3% for the quarter to $98.4 million and 1% to $192.2 million for the half-year basis. Broadband revenue decreased 17% for the quarter $51.0 million and 15% for the half-year to $104.9 million. Fixed Network revenue increased 2% both for the quarter and half-year periods to $92 million and $182.2 million respectively.

The group’s EBITDA decreased 2% for the quarter and also for the first half to $187 million and $365 million, respectively. EBITDA margin as a percentage of service revenue was 34.0% for the quarter and on a half-year basis, it was at 33.3%.

Free cash flow was $62 million for the quarter and cash capital expenditure (capex) was 6% higher at $95 million compared to a year ago. On a half-year basis, free cash flow was $166 million while cash capex was $162 million.
http://www.theedgesingapore.com/the-dail...3-mil.html

With more apps like Nanu, telcos will have to reinvent themselves as well...

(05-08-2014, 09:18 PM)CityFarmer Wrote: The Edge online report on the Starhub 1H result.

Up to now, base on both results from M1 and Starhub, the worst casualty of the MyRepublic 1Gbps deal, is the Starhub broadband business. M1 still gained positively albeit slower growth. SingTel's 1Q (till end-June) report is yet to announce.

(vested in M1, not in SingTel and Starhub)

StarHub 2Q net profit falls 6.3% to $94.3 mil

StarHub said it posted a 6.3% decrease in net profit to $94.3 million for the second quarter ended June 30.

Total revenue for the quarter was at $576 million, 2% lower compared to a year ago. On a half-year period, revenue was at $1.1 billion.

Mobile services revenue decreased 1% for the quarter to $310.3 million and was stable for the half-year at $616.2 million. Pay TV revenue increased 3% for the quarter to $98.4 million and 1% to $192.2 million for the half-year basis. Broadband revenue decreased 17% for the quarter $51.0 million and 15% for the half-year to $104.9 million. Fixed Network revenue increased 2% both for the quarter and half-year periods to $92 million and $182.2 million respectively.

The group’s EBITDA decreased 2% for the quarter and also for the first half to $187 million and $365 million, respectively. EBITDA margin as a percentage of service revenue was 34.0% for the quarter and on a half-year basis, it was at 33.3%.

Free cash flow was $62 million for the quarter and cash capital expenditure (capex) was 6% higher at $95 million compared to a year ago. On a half-year basis, free cash flow was $166 million while cash capex was $162 million.
http://www.theedgesingapore.com/the-dail...3-mil.html

(05-08-2014, 09:09 PM)CityFarmer Wrote:

(05-08-2014, 09:00 PM)Stecano Wrote: Hi,
Could someone help me understand why is Starhub's price relatively high given that it's still accumulating deficits?
Given that the dividend is relatively high but then it's still in deficit as I believe the earnings are channelled to pay dividends.
Given such a scenario, what would be some of the reasons why people want to invest in companies that have a record of deficit?
Are they taking a 'big' risk as it's getting more and more difficult to keep up with the high dividends as the accumulated deficits continue to pile higher.
Thanks for your thoughts.

I merged the new thread under Starhub thread. You may want to post company related posts under the appropriate company thread in the future.

Regards
Moderator

Noted and thanks for your help to move it to the right location.

(05-08-2014, 11:30 PM)Stecano Wrote:

(05-08-2014, 09:09 PM)CityFarmer Wrote:

(05-08-2014, 09:00 PM)Stecano Wrote: Hi,
Could someone help me understand why is Starhub's price relatively high given that it's still accumulating deficits?
Given that the dividend is relatively high but then it's still in deficit as I believe the earnings are channelled to pay dividends.
Given such a scenario, what would be some of the reasons why people want to invest in companies that have a record of deficit?
Are they taking a 'big' risk as it's getting more and more difficult to keep up with the high dividends as the accumulated deficits continue to pile higher.
Thanks for your thoughts.

I merged the new thread under Starhub thread. You may want to post company related posts under the appropriate company thread in the future.

Regards
Moderator

Noted and thanks for your help to move it to the right location.

They have been on +VE FCF. DPS is below EPS too. Maybe you can help to explain the deficits ?

(06-08-2014, 01:36 AM)corydorus Wrote:

(05-08-2014, 11:30 PM)Stecano Wrote:

(05-08-2014, 09:09 PM)CityFarmer Wrote:

(05-08-2014, 09:00 PM)Stecano Wrote: Hi,
Could someone help me understand why is Starhub's price relatively high given that it's still accumulating deficits?
Given that the dividend is relatively high but then it's still in deficit as I believe the earnings are channelled to pay dividends.
Given such a scenario, what would be some of the reasons why people want to invest in companies that have a record of deficit?
Are they taking a 'big' risk as it's getting more and more difficult to keep up with the high dividends as the accumulated deficits continue to pile higher.
Thanks for your thoughts.

I merged the new thread under Starhub thread. You may want to post company related posts under the appropriate company thread in the future.

Regards
Moderator

Noted and thanks for your help to move it to the right location.

They have been on +VE FCF. DPS is below EPS too. Maybe you can help to explain the deficits ?

The information from Poems stock analytics shows Starhub's DPS to be higher than EPS in the years 2009,10,11 except 2012 and 2013
I don't own Starhub shares and I happen to see this while comparing the 3 telcos. Only Starhub has negative retained earnings from 2009 to 2013.
What I hope to learn from the folks here is their perspective what drives the price of Starhub. It's probably dividends but does the negative retained earnings for the last 5 years have any bearing at all on the risk or prospects?

(06-08-2014, 01:36 AM)corydorus Wrote:

(05-08-2014, 11:30 PM)Stecano Wrote:

(05-08-2014, 09:09 PM)CityFarmer Wrote:

(05-08-2014, 09:00 PM)Stecano Wrote: Hi,
Could someone help me understand why is Starhub's price relatively high given that it's still accumulating deficits?
Given that the dividend is relatively high but then it's still in deficit as I believe the earnings are channelled to pay dividends.
Given such a scenario, what would be some of the reasons why people want to invest in companies that have a record of deficit?
Are they taking a 'big' risk as it's getting more and more difficult to keep up with the high dividends as the accumulated deficits continue to pile higher.
Thanks for your thoughts.

I merged the new thread under Starhub thread. You may want to post company related posts under the appropriate company thread in the future.

Regards
Moderator

Noted and thanks for your help to move it to the right location.

They have been on +VE FCF. DPS is below EPS too. Maybe you can help to explain the deficits ?

Let's update few data, before further explanation from Stecano

FCF/share, base on 1H2014 result, was 9.6 cents per share, so 19.2 cents per share for FY2014? Base on the TTM data, the FCF/share was slightly less than 18 cents, base on my calculation. Both fall below the dividend payout of 20 cents per share.

http://infopub.sgx.com/FileOpen/PS2Q2014...eID=308363

EPS in FY2013 was 21 cents per share, and 5% deterioration of EPS in FY2014, will make the EPS fall below the DPS.

(not vested)

Starhub has negative consolidated reserve due to goodwill in SCV. That's why on a holding company basis it looks ok.

Since our discussion below, IMHO it is clear the moat is slowly but surely eroding.

On cashflow basis we also have to be very careful as the dividend payment depends on no surprises on the FCF as it is very tight so no margin of error. Stecano should also understand that FCF is different from Earnings.

(11-05-2013, 03:59 PM)CityFarmer Wrote:

(11-05-2013, 11:42 AM)specuvestor Wrote:

(09-05-2013, 11:08 PM)LLI Wrote: Hi, I am new to starhub, why is the NTA of the company so low?

IIRC it is related to the acquisition of SCV

I often quote starthub as an example of how to value a company using cashflow and ROIC rather than PTBV or ROE. These latter 2 numbers look ridiculous on starhub

The main asset of "SCV" had been the "pipe" ie a captive market once signed on. Mio presence has already diminished that moat. Smart TV and internet streaming via fiber for eg Youtube's pay TV will further erode that competitive advantage. The question as always is how long it can drag. Impact on Starhub's pay TV had been minimal until last year.

The uniqueness of Starhub's equity after SCV acquisition had been discussed in detail in this thread. Probably a search will able to get the detail of the discussion.

(06-08-2014, 12:24 PM)specuvestor Wrote: Starhub has negative consolidated reserve due to goodwill in SCV. That's why on a holding company basis it looks ok.

Since our discussion below, IMHO it is clear the moat is slowly but surely eroding.

On cashflow basis we also have to be very careful as the dividend payment depends on no surprises on the FCF as it is very tight so no margin of error. Stecano should also understand that FCF is different from Earnings.

Yes I'm learning that FCF is different from earnings. Indeed I'm glad I came across this website and learn from many of the helpful folks here.
Interesting though, if I use FCF instead of earnings, this is going to be even more stressful for Starhub as their DPS is higher than FCF and could be in that state from 2009 to 2013. That makes me wonder how long can their share price maintain. It is getting more and more difficult for them to keep up with their high dividends. And if they stick to it without growing their income, their retained earnings is going to continue to get worse.

Just a comment on Starhub Rewards Program. It is getting devalued. No more offset of services.
Probably Lim TH stressed on maintaining Starhub ARPU.

2Q14 FCF $61.9M

Diluted Earning per share 5.4 cents
Dividends 5 cents amount to roughly $86M this 2Q14.

Growing ?
"As at 30 June 2014, the share capital of the Company was S$282.3 million comprising 1,726,103,875 issued ordinary shares (excluding treasury shares). As at 31 December 2013, this was S$271.4 million or 1,721,412,710 ordinary shares (excluding treasury shares)."

A balancing act i believe.