Singapore’s second largest operator StarHub posted strong growth in earnings in Q1, helped by a sharp drop in capex, but weak handset sales led to a decline in overall revenue as well as mobile turnover.

The operator’s net profit rose 26 per cent to SGD93 million ($68.7 million), while EBITDA was up 13 per cent to SGD163 million. Its EBITDA margin jumped 3.8 points to 33.8 per cent.

Total revenue in Q1 fell 4.4 per cent to SGD591 million, which was primarily driven by a drop in the sale of equipment, which fell 37 per cent to SGD48.6 million. The company said the fall was due to a drop in the volume of handsets sold and a lower average selling price, attributed to a lower mix of high-end models.

Service revenue was stable at SGD542 million as an increase in broadband and enterprise fixed services revenue offset lower revenue from mobile and pay-TV services.

Mobile service revenue dropped 2.4 per cent to SGD298 million, with both postpaid and prepaid segments seeing sales declines. Pay-TV revenue was down 1.2 per cent to SGD94.9 million due to a lower subscriber base.

Strong broadband growth
On the positive side, broadband revenue expanded 11.3 per cent to SGD53.5 million, driven by increased take-up of higher-speed plans, which contributed to a SGD3 increase in ARPU. Enterprise fixed revenue was up by 5.4 per cent to SGD95.8 million, mainly due to growth in internet data services.

StarHub CEO Tan Tong Hai said its ‘Hubbing’ packages helped maintain low churn rates across all lines of business. “We are especially pleased to see continued growth in our broadband revenue for the fifth sequential quarter.”

The percentage of Hubbing households that subscribed to two or more services remained at 59 per cent. It has nearly 250,000 triple-play households.

Its prepaid customer base grew by 9,000 to 855,000, while its postpaid base was up by 42,000 to 1.34 million year-on-year. Compared with a year ago, postpaid ARPU increased SGD1 to SGD69 and prepaid ARPU was down by SGD1 to SGD17.

Capex for the period fell 57 per cent to SGD42 million compared to the same period last year. Overall operating expenses decreased 9 per cent to SGD486 million, driven largely by a 20 per cent drop in the cost of sales to SGD230 million, which was due to the lower handset sales.

StarHub forecasts service revenue to grow in the low single-digit range in 2016.