Starhub’s 4Q20 revenue fell 5% YoY to SGD579.5m, due largely to lower contributions from Mobile, Pay TV and Sales of Equipment, though partially offset by higher revenues from Broadband and Enterprise Business. 4Q20 PATMI was SGD 36.1m, or 37% above consensus. DPS for FY20 came in at 5 S-cents, which was below our expectations of 6 S-cents.

We are encouraged that we are seeing signs of sequential improvement. While service revenue was down 6% YoY, it was up 8% QoQ with cybersecurity increasing 59% QoQ. We note that on a QoQ basis, mobile postpaid, mobile prepaid, pay TV and broadband ARPUs came in broadly stable. We understand that there appears to be more activity in the enterprise space as businesses prepare for a post-Covid world.

In terms of guidance, we note that management is taking a declining outlook on mobile, assuming Covid-19 impact on travel remains in 2021.

Separately, Starhub has noted accelerating demand for its 5G plans driven by the launches of premium 5G handsets, and we believe that ARPU-improvement is not implausible, with company noting that 5G plans are contributing to stabilising mobile ARPUs sequentially in 4Q20.

As we roll forward our estimates and following adjustments, our FV rises from SGD1.13 to SGD1.32. HOLD.

Source: OCBC Research - 24 Feb 2021