2/11/16
StarHub (STH SP)
3Q16: Sustainability Of Dividend Policy At Risk
- Mobile and pay-TV businesses continued to be under pressure while residential broadband and fixed enterprise businesses have progressed sideways. Mobile revenue was down 3.6% yoy (post-paid: -2.4%, pre-paid: -10.7% yoy). StarHub lost 11,000 pay-TV subscribers, the fifth consecutive quarter of sequential contraction. Net profit declined 27.5% yoy.
- StarHub’s dividend policy of paying out 5 S cents per quarter and 20 S cents per year is at risk of downgrade as grants from NGNBN taper off and competition intensifies with the potential entry of a fourth mobile operator.
- Maintain SELL. Lowered target price to S$2.40.
