- StarHub's 1Q25 NPAT declined 18% y-o-y/16% q-o-q and it’s trending at 19% of street and 20% of MIBG’s full-year forecasts.
- Service revenues declined 1% y-o-y, mainly led by mobile (-4% y-o-y) and cybersecurity (-13% y-o-y), but partially offset by a 10% y-o-y growth in enterprise services.
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- Despite weak 1Q25, management maintained guidance of stable EBITDA and minimum 6 cents dividend.
Key takeaways from post-results analyst call
- Management says mobile competition remains intense leading to erosion in roaming revenue (high margin in our view). While competition remains high and users are shifting from premium to value and digital brands, StarHub remains active in all the spaces thereby not allowing smaller operators/MVNOs to take away market share.
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- MVNOs are materially contributing to MNOs’ mobile revenue although they do indirectly erode MNOs revenue by competing in the same space as MNOs. Management noted that MVNOs are operating at super thin margins and that could pave way for them to price more rationally.
- Cyber security revenues are lumpy in nature and management sees strong structural growth drivers remain in place.
- Dare+ investments of cS$30m will be incurred by 1H25 and after that it expects to decommission certain legacy assets. These in turn should allow softening in costs and D&A growth.
Trim earnings and NPAT forecasts, maintain HOLD
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