StarHub declared an interim dividend of 4 cents per share for 1Q17, lower than the interim dividend of 5 cents per share a year ago.
(See: StarHub posts 21% decline in 1Q earnings to $73 mil on higher expenses, lower other income)
“Mobile and pay TV [revenue] declined further while broadband lost its growth momentum,” says CIMB analyst Foong Choong Chen in a report on Thursday. “Broadband revenue was largely flat year-on-year and down for the second consecutive quarter by 0.9% quarter-on-quarter.”
To make matters worse, the Singapore telcos in April had paid “shockingly high” prices in the bidding in the General Spectrum Auction (GSA).
StarHub and the rest of the telcos were involved in some aggressive bidding, which saw the final spectrum prices for the 700MHz and 900MHz bands overshoot their reserve prices by 4.7x and 6.6x, respectively.
(See: Casualties galore amid telco spectrum bidding war)
After factoring in the higher-than-expected spectrum payments, CIMB lowered StarHub’s target price by close to 6%.
“We cut FY17F-19F core EPS by 0.8-9.5% due to higher amortisation and interest cost arising from the high price of $282 million for the 700MHz (2x15MHz) spectrum, which is likely to be paid in 2H18,” Foong says.
As at 4.30pm, shares of StarHub are trading 1 cent lower at $2.77.
