11 May 2005

The listing of the shares of StarHub Ltd on the SGX-ST was sponsored by Credit Suisse First Boston (Singapore) Limited and UBS AG, acting through its business group, UBS Investment Bank.

  • First-Ever Quarterly Net Profit Of S$30.4 million On Operating Revenue Of S$375 million
  • EBITDA Increased 56% To S$99.4 million, Helping To Drive Free Cash Flow To A Record S$49.3 million
  • Company Plans To Initiate A Minimum Annual Recurring Dividend Of Eight Cents Per Share, Beginning FY2005

Singapore, 11 May 2005 – StarHub Ltd ("StarHub" or "The Group") achieved stunning results with its first quarterly net profit of S$30.4 million for 1Q2005. This compares very favourably with a net loss of S$36.2 million in 1Q2004. The Group's operating revenue is S$374.8 million for the quarter, which is a 16% increase over the S$324.1 million recorded in 1Q 2004.


EBITDA for the quarter grew 56% to S$99.4 million, while as a percentage of service revenue, EBITDA margin increased 7.4 percentage points to 28.3%. The improvement in EBITDA is primarily attributable to the increase in revenue and improved operating efficiencies.


StarHub generated strong cash flow for the quarter at S$49.3 million, compared to negative S$9.7 million one year ago. Capital Expenditures, as a percentage of operating revenue, were 15% in 1Q 2005, as compared to 13% in 1Q2004.


The Group generated profit from operations of S$13.3 million, excluding the recent change in depreciation rates. This is an improvement of S$30.5 million when compared to a net loss of S$17.2 million in 1Q2004.


During the quarter, StarHub effected a change in depreciation rates for certain of its network assets, which resulted in a S$29.1 million reduction in the Group's depreciation charge for the period. This further increased the profits from operations to S$42.4 million.


StarHub's net profit after tax leapt S$66.6 million to S$30.4 million for the quarter, compared to a negative S$36.2 million in 1Q2004. Based on the weighted average number of shares, earnings per share climbed to 1.43 cents compared to a negative 1.72 cents in the previous corresponding quarter.


Three of the Group's four lines of business achieved double-digit revenue growth quarter-on-quarter. Residential Broadband continued to be the fastest growing line of business, registering a 49% quarter-on-quarter growth in revenue due to increases in customer base and ARPU. Cable TV revenue grew 22%, also due to customer base and ARPU expansion. Mobile services maintained its revenue growth momentum at 17% quarter-on-quarter, primarily driven by an increased customer base. Fixed Network services revenue declined 11% as a result of lower voice service revenue.


Financial Highlights


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1Q2005 Financial Highlights


Contributions to the revenue mix from Mobile, Cable TV, Fixed Network Services, Broadband, and Sales of Equipment were 52%, 17%, 14%, 11% and 6%, respectively.


Mobile revenue grew 17% to S$196 million from S$167 million, on the back of a 29% increase in its customer base to 1.232 million. Post-paid mobile services revenue rose 9% quarter-on-quarter to S$160 million, accounting for 82% of the Mobile revenue mix.  Pre-paid mobile services revenue grew 78% to S$36 million. Post-paid ARPU was S$70, and pre-paid ARPU was S$24. Non-voice services increased its contribution to 16.5% of blended ARPU.

Cable TV revenue grew 22% to S$63 million. ARPU for Cable TV increased to S$45 from S$39 quarter-on-quarter. The higher penetration of Digital Cable customers and the increased pricing of the Sports package contributed to the higher ARPU.


Broadband revenue grew 49% to S$40 million, compared to S$27 million a year ago. With the growing popularity of home-networking for multiple PC households, a higher proportion of customers are signing up for the faster access speed plans, thereby driving a S$6 increase in ARPU to S$57.


Fixed Network Services recorded revenues of S$53 million compared to S$59 million in the corresponding period of 2004. This was due to a decrease in voice revenues by S$8.8 million to S$18.3 million in 1Q 2005. The Group's international voice transit business was reduced by S$3.6 million quarter-on-quarter, and collection rates have declined as expected with the continuing commoditisation of IDD service.



1Q2005 Business Highlights


Mobile customer base grew 6% against the overall Singapore mobile market growth of 3% over the 4Q2004. StarHub's share of the market net adds for the quarter was 56%, as mobile market penetration reached 94.1% in Singapore. The Company captured the largest net adds for both the pre-paid and post-paid markets in Singapore and its Mobile share of market reached 30.9% as at 31 March 2005. Compared to last year, our customer base grew by 29%. MMS traffic more than doubled to reach 4.2 million messages, compared to 2 million messages a year ago. GPRS traffic increased by 371 Gb, up 119% to 683 Gb as at 1Q 2005, compared to the earlier corresponding period.


Cable TV customer base grew 9% to 417,000, representing a household penetration of 37.7% compared to 35.4% one year ago. Digital Cable TV customers grew to 86,000, which is 20.6% of the customer base after only 10 months.


Broadband households increased by 40% over last year, closing the quarter at 232,000 customers. This represents a 47% share of the residential broadband market, an increase from 42.5% a year ago. The monthly churn rate was reduced to 1.0% in 1Q 2005, from 1.2% one year ago.


In 1Q 2005, the total Hubbing households grew 6.9% to 689,000. The percentage of StarHub customers who subscribed to two or more services rose from 37.5% one year ago, to 43.3%.


"We are pleased with the positive response to StarHub's unparalleled suite of products and services. In addition, our efforts to deliver quality services and a fair deal to consumers have helped to strengthen our market position," said Mr Terry Clontz, President and CEO.


"As we expected, StarHub is achieving profitability in 2005 with its first-ever quarterly net profit. Shareholders will also be pleased to hear that the Company is providing a more definitive policy regarding dividends," added Mr Clontz.



Dividend Policy


Barring any unforeseen circumstances, and in view of the Group's present surplus cash position and distributable reserves, coupled with anticipated cash flow and profitability trends, the Company intends to initiate a recurring minimum annual dividend of eight cents per share beginning with fiscal year 2005. Dividends will be on a tax-exempt 1-tier basis. The Company plans to announce an interim dividend with its 2Q2005 results.



Group Outlook


For FY2005, there could be a slight upside to the previous guidance for high single digit revenue growth. EBITDA, as a percentage of service revenue, is now expected to approach 30% for the year. CAPEX is still expected to be in the mid-teens, as a percentage of operating revenue.


For more details on the Group's performance for 1Q2005, please visit  www.starhub.com/ir. Materials available at this website include the presentation and unaudited results for the first quarter ended 31 March 2005.


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Some of the statements in this news release constitute "forward-looking statements" that do not directly or exclusively relate to historical facts. These forward-looking statements reflect StarHub Ltd’s current intentions, plans, expectations, assumptions and beliefs about future events and are subject to risks, uncertainties and other factors, many of which are outside StarHub Ltd’s control. Important factors that could cause actual results to differ materially from the expectations expressed or implied in the forward-looking statements include known and unknown risks. Because actual results could differ materially from StarHub Ltd’s current intentions, plans, expectations, assumptions and beliefs about the future, you are urged to view all forward-looking statements contained in this news release with caution."