StarHub Reports 2009 Second Quarter and Half Year Results

• Operating Revenue At S$532 Million
• EBITDA Rose 10% To S$161 Million
• EPS Increased 21% To 4.5 Cents Per Share
• Declares Interim Dividend Of 4.5 Cents Per Share

Singapore, 5 August 2009 – Operating revenue was stable at S$532 million compared to S$531 million in 2Q2008. For the half year, it stood at S$1.06 billion. The Group’s EBITDA for the quarter rose 10% to S$161 million and for the half year, increased 5% to S$329 million. EBITDA margin as a percentage of service revenue was 31.5% for the quarter and at half time, it registered 32.2%.

For the quarter, profit from operations was 13% higher year-on-year (YoY) at S$101 million. Net profit after tax increased 21% to S$78 million. Free cash flow (FCF) at S$148 million was 6% higher compared to last year’s S$140 million. Looking at the half year, profit from operations was S$208 million or 6% higher YoY. FCF was S$264 million or 55% higher than last year’s S$170 million.

Capital expenditure (capex) was S$24 million higher at S$70 million from a year ago. For the half year, it was 15% higher at S$121 million.

Financial Highlights

2Q2009 Financial & Business Highlights

Revenues for Fixed Network services and Mobile grew by 7% and 1% respectively. However, Pay TV and Broadband revenues contracted by 2% and 3% respectively.  Mobile continues to be the major revenue contributor at 51%. Pay TV, Broadband, Fixed Network Services and Sales of Equipment contributed 19%, 11%, 15% and 4% respectively to the mix.

• Mobile revenue grew 1% to S$272 million from S$269 million for the quarter. Post-paid mobile services revenue was 2% lower at S$208 million, accounting for 76% of the Mobile revenue mix. Pre-paid mobile services revenue rose 12% to S$64 million. Post-paid ARPU slipped S$8 to S$69, while pre-paid ARPU moved up S$3 to S$23. The lower post-paid ARPU was mainly attributable to decreases in voice, IDD and outbound roaming usages.
• Pay TV revenue slipped to S$101 million from S$102 million. The higher revenue from a year ago was attributed to higher advertising revenue related to Euro 2008 event. Pay TV ARPU at S$56 for the quarter was S$2 lower when compared YoY. Customer base was up 4% to 530,000. The number of customers on the digital platform increased 16% to 528,000 households. Digital customers are now almost 100% of the total pay TV customer base.
• Broadband revenue decreased 3% to S$60 million YoY. The residential broadband customer base grew 9%, ending the quarter with 389,000. However, a larger mix of lower speed plans coupled with price discounts contributed to the S$6 ARPU decrease to S$51. Looking at the average monthly churn for the quarter, it was higher at 1.4%.
• Fixed Network revenue increased 7% to S$80 million from S$75 million previously. Data & Internet services revenue, which makes up 85% of the Fixed Network revenue, jumped 13% to S$68 million from S$60 million a year ago.
• The percentage of total Hubbing households that subscribed to any two or more StarHub services stands at 54%, with 43% subscribing to all three services.

"We are pleased with the results given the challenging business environment that we operate in. Our diversified revenue base has allowed us to mitigate the impact of softer demand due to the weakened economy in certain segments. Good cost containment has delivered excellent free cash flows with substantial headroom for sustaining our guidance on dividend payments,” said Mr Terry Clontz, CEO of StarHub. “However, as it is not clear whether we have yet seen the worst impact of the economic downturn on our business, we will remain diligent in looking for ways to control costs while pursuing profitable growth.”

Outlook for FY2009

Based on the current outlook, we expect the Group’s 2009 service revenue to be maintained at around the 2008 level, and our 2009 Blended EBITDA margin on service revenue to be around 32%. 2009 capex payment is expected not to exceed 11% of overall operating revenue. In view of the expected profitability and cash flow in 2009, we maintain our dividend guidance to pay a minimum annual cash dividend for FY2009 at 4.5 cents per ordinary share per quarter, totalling 18.0 cents for the full year.

For more details on the Group's performance for 2Q2009 and outlook for FY2009, 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 2009.

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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.