SINGAPORE - StarHub posted a net profit of $72.9 million for the second half of its financial year ended Dec 31, 2023, from $1.3 million over the same period a year earlier.

In 2022, the company recorded higher non-operating expenses from impairment losses of certain legacy network assets coupled with goodwill and intangible assets from Strateq, the company’s information and communications technology arm.

This comes as the company’s revenue over the same period fell 0.1 per cent to $1.3 billion.

Meanwhile, its service revenue grew 3 per cent to $1.1 billion, while service earnings before interest, taxes, depreciation and amortisation (Ebitda) rose 33 per cent to $219 million.

StarHub chief executive Nikhil Eapen said that the increase in service Ebitda margin came on the back of growth in high-margin segments, such as in mobile services.

He pointed out that it was also achieved despite “significant” spending on the company’s Dare+ transformation plan.

Dare+ is a programme StarHub rolled out in 2021 that aims to harness 5G Internet of Things products and solutions and cloud connectivity to deliver sustainable revenue growth and reduce operating expenditure.

Mr Eapen also expects the company’s move to substitute legacy capital expenditure with operating expenditure to improve its net margin efficiency and increase net profit as a percentage of Ebitda.

He said that the move has allowed the company to pay a good dividend and reduce its net debt slightly to 1.36 times the company’s Ebitda.

For the second half of financial year 2023, the company declared a final dividend of 4.2 cents per share. This brings the full-year dividend up to 6.7 cents per share, higher than the five cents per share of dividends distributed in financial year 2022.

For the full year ended Dec 31, 2023, StarHub posted a 140.4 per cent rise in net profit to $149.6 million, while revenue rose 2 per cent to $2.4 billion.

The company had set an interim milestone to achieve $150 million in net profit by financial year 2023 when it launched Dare+ in 2021.

Chief financial officer Dennis Chia said that the company has about $80 million in Dare+ expenditure in 2024. With these expenses accounted for, the company has guided for a dividend of at least six cents in financial year 2024.

It has also reiterated its commitment to distributing at least 80 per cent of its net profit after tax, adjusted for one-off, non-recurring items.

Beyond the company’s Dare+ plans, Mr Eapen said that he will be looking at mergers and acquisitions through two prongs.

First, Mr Eapen noted that the company remains “ready and able” to consolidate with other local players. “We have low leverage, we have lots of funding firepower, we have execution credibility… and we have experience in making acquisitions, but you can’t force these things. They have to take their time,” he added.

Mr Eapen sees consolidation as a regular feature of every market and a “natural course of things”, with telcos in Malaysia, Indonesia and Thailand all seeing moves to consolidate in some form within the last 18 months.

Second, the company is looking for opportunities to grow its regional enterprise business beyond Singapore and Malaysia in the area of managed services and cloud networking.

Currently, the company derives about a fifth of its service revenue from overseas operations under Strateq, Jos Malaysia and Ensign’s regional operations.

“We want to acquire companies that are more cloud native in the way that they do things, and in scale markets in the region, we don’t want to be managing far-flung operations,” Mr Eapen said. THE BUSINESS TIMES