StarHub Reports 2008 Second Quarter and Half Year Results

Singapore, 6 August 2008 – The second quarter of 2008 operating revenue increased 9% to S$531 million from S$489 million year-on-year (YoY). For the half year, it recorded S$1,066 million or 11% growth. The Group’s EBITDA for the quarter dipped 10% to S$147 million, primarily due to substantially higher acquisition and retention costs as a result of a record number of people choosing StarHub services. EBITDA margin as a percentage of service revenue was 28.9%. For the half year, EBITDA registered S$314 million and EBITDA margin came in at 31.0%.

For the quarter, profit from operations was 17% lower YoY at S$89 million. Net profit after tax decreased 21% to S$64 million. Free cash flow (FCF) at S$140 million was 14% lower compared to last year’s S$162 million. Looking at the half year, profit from operations was at S$197 million or 6% lower YoY. FCF was at S$170 million or 44% lower than last year’s S$303 million.

Capital expenditure (capex) was S$4 million higher at S$46 million compared to S$42 million a year ago. For the half year, it was 59% higher at S$105 million. Capex was used on the new customer management information system, network infrastructure capacity expansion and upgrades for the international and cable networks.

Financial Highlights

2Q2008 Financial & Business Highlights

For the second consecutive quarter this year, Pay TV revenue registered the highest growth, registering a 25% YoY lift. Mobile revenue grew 7%, while Fixed Network services increased 12%. Broadband revenue remained constant for the quarter. Mobile continues to be the major revenue contributor at 51%. Pay TV, Broadband, Fixed Network Services and Sales of Equipment contributed 19%, 12%, 14% and 4% respectively to the mix.

• Mobilerevenue grew 7% to S$269 million from S$253 million for the quarter. The higher revenue was primarily contributed from a larger post-paid customer base and higher post-paid ARPU. Post-paid mobile services revenue was up 12% YoY to S$212 million, accounting for 79% of the Mobile revenue mix. Pre-paid mobile services revenue slipped 9% to S$58 million. Post-paid ARPU moved up S$3 to S$77, while pre-paid ARPU contracted S$6 to S$20.
• Pay TVrevenue jumped 25% to S$102 million from S$82 million. Driven by the increase in Basic and Sports group subscription prices, and boosted by the higher subscription fee from the UEFA EURO 2008, Pay TV ARPU at S$58 for the quarter was S$9 higher when compared YoY. Customer base was up 3% to 511,000. The number of customers on the digital platform increased 25% to 453,000 households. Digital customers now make up 89% of the total pay TV customer base.
• Broadbandrevenue remained constant at S$62 million YoY. The MaxOnline customer base grew 7%, ending the quarter with 358,000. As a result of the new customers signing up to the recently introduced low end plan, ARPU decreased S$3 to S$57.
• Fixed Networkrevenue increased 12% to S$75 million from S$67 million previously. Data & Internet services revenue, which makes up 81% of the Fixed Network revenue, jumped 20% to S$60 million from S$50 million a year ago.
• The percentage of total Hubbing households that subscribed to any two or more StarHub services stands at 52%, with 40% subscribing to all three services.

"We added a record number of post-paid Mobile customers in the second quarter and first half of 2008. The short-term financial consequence of this success is a dilution to earnings. However, this positive trend in customer preference for StarHub services should deliver good momentum in future periods,” said Mr Terry Clontz, CEO of StarHub. “We believe the competitive intensity we have seen in certain segments of the market should return to more sensible levels in the second half of the year,” he added.

Outlook for FY2008

Based on the current outlook, barring any unforeseen circumstances and changes in the economic and market conditions, we expect the Group’s 2008 operating revenue growth will be around 7% YoY. Blended EBITDA margin on service revenue is expected to be around 31%, and the 2008 cash capital expenditure is not expected to exceed 12% of operating revenue. We also maintain our commitment to pay a minimum annual cash dividend for FY2008 of 18.0 cents per ordinary share.

For more details on the Group's performance for 2Q2008 and outlook for FY2008, please visit www.starhub.com/ir. Materials available at this website include the audio conference link, investor presentation and unaudited results for the quarter ended 30 June 2008.

“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."