StarHub posted a net profit of $161.7 million for FY2024 ended Dec 31, 2024, up 7.7% over the preceding FY2023, as total revenue rose 1.4% to $2.4 billion in the same period. Growth is supported by the company’s shift from an asset-heavy model to an asset-light approach, moving from legacy systems to cloud and software-as-a-service (SaaS) platforms while leveraging shared cost structures, says Eapen.
The company also reported strong cash generation, with $162.2 million in free cash flow for FY2024 and low leverage with net debt to ebitda reduced to 1.29 times as of Dec 31, 2024. “With that strong free cash flow and low leverage, we remain committed to shareholder returns — whether dividends or otherwise — as well as positioned for mergers and acquisitions (M&As) [when the right opportunities arise],” he adds.
Smart city backbone
In FY2024, StarHub’s enterprise business was a major growth driver, with revenue rising 14.1% to $980.9 million. Notably, its managed services segment delivered a robust 16.5% revenue growth, driven largely by its modern digital infrastructure platform and solutions.
StarHub’s modern digital infrastructure is a comprehensive platform built on a hybrid multi-cloud architecture, offering cloud services, data centres, a ubiquitous network, cybersecurity and management tools. “We’re not just reselling cloud platforms like Google Cloud or Amazon Web Services but hosting those and our private cloud in our own landing zones in a fully containerised manner and with a management platform that has service assurance, orchestration, cybersecurity and more,” says Eapen. “Enterprise customers get the benefit of the cloud platforms with all the things they need to manage their [cyber]resilience to get the most value out of the cloud while preventing cloud costs from running too high.”
He highlights that StarHub’s unique, ubiquitous connectivity is a key part of its modern digital infrastructure. By integrating 4G and 5G mobile networks, optical networks and enterprise networks — including software-defined, Wi-Fi, and enterprise WAN or LAN — StarHub allows enterprises to seamlessly match the right network to each use case.
StarHub also believes that modern digital infrastructure will be crucial in helping Singapore realise its ambitions of becoming a smart nation and enabling large enterprises to transform digitally.
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A prime example is StarHub’s upcoming rollout of an intelligent, software-defined network in the Punggol Digital District, integrating 5G and network automation across data centres, campuses and sub-systems. The network’s advanced features, including location-based analytics and network telemetry, support digital twins — virtual replicas of physical devices and services. By combining the network with JTC and GovTech’s Open Digital Platform, the district’s operating system can ingest data across Punggol, driving a new digital economy and fostering collaboration between businesses and the community.
Since the modern digital infrastructure is built on a common enterprise architecture, it can enhance cybersecurity. “We have visibility over enterprise Internet and consumer Internet (be it broadband or mobile), so we can observe threat actors in our environment and track them using our full-stack ability. We also work closely with the Cyber Security Agency of Singapore and the Infocomm Media Development Authority to ensure our nation’s network is secure,” says Tan Kit Yong, head of StarHub’s Enterprise Business Group.
A common enterprise architecture allows StarHub to increase its share of wallets with existing customers beyond Singapore. Tan adds: “We can bring our new portfolio and real-world use-cases from Singapore to existing customers in Malaysia that are currently solutions-focused, like Tenaga Nasional, [to accelerate transformation like] smart grid projects or co-create solutions.”
Eapen adds that its modern digital infrastructure powered by Cloud Infinity is “highly scalable, allowing our customers to get to their smart city solutions and platforms much faster with lower total cost of ownership. We are integrating our regional ICT business into our managed services segment, where we will drive similar business and similar platforms across the Asean region.”
Defending the mobile business
Despite the “hyper-competition” in the mobile market, StarHub’s mobile business continues to see strong traction from SIM-only subscriptions, registering strong growth in its subscriber base y-o-y mainly from giga! and eight (StarHub’s mobile virtual network operator).
“Our [mobile] strategy is multi-market segmentation and to maximise revenue market share and lead in each segment. We previously didn’t have digital or value segments [but now serve those via giga! and eight respectively] because the market continues to shift,” Eapen says, adding that eight does not cannibalise giga! or its premium segment.
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He believes StarHub can achieve this because its multi-market segment offerings operate on the same core, automated and data-driven platform. Furthermore, the company’s network cloudification under Dare+ provides the highest level of observability over its customers, enabling it to offer hyper-personalised services across all segments and highly targeted, context-driven cross-selling within its premium segment.
CGS International analysts foresee StarHub’s ramp-up expansion into eight, as the value segment is branded, to impact average revenue per user (ARPU) growth in the coming quarters.
M&A growth
Aiming to expand its enterprise business, StarHub is exploring synergistic and accretive M&As to scale further in the Asean region. “We’re looking at hundreds of millions [of dollars] in terms of sizing and into opportunities that will really move a needle for us in the right Asean markets,” says Eapen.
StarHub is targeting Asean markets “with a higher propensity for more mature technology adoption” in their public and private sectors.
Eapen adds: “We’re looking for large markets, whether through the government or the private sector, that have more mature technology adoption. We’re also looking at large-scale businesses that are infrastructure and smart city-centric because that plays to our advantages where [our modern digital infrastructure can deliver to them] hybrid, multi-cloud with ubiquitous connectivity as well as tech, tools and data-driven solutions on top as a full stack that’s highly scalable.”
While analysts anticipate industry consolidation, Eapen says StarHub cannot speculate or comment on the matter. “All we can do is point to ourselves and say our performance speaks for itself. In a competitive marketplace, we are completing our transformation, our leverage is low, and our funding firepower is high. So, at the right time, under the right circumstances, and after clearly evaluating risks and downsides alongside synergies and upsides, we look forward to doing a consolidation that is value accretive for our shareholders.”
According to Maybank Securities analyst Hussaini Saifee, industry consolidation will bring “limited potential benefits [to StarHub because of the] sub-scale but better-geared No.4 operator Simba”, which competes with StarHub’s value segment, eight. He also sees limited potential for StarHub to meaningfully increase the FY2025 dividend from FY2024’s 6.2 cents per share due to a stable ebitda outlook and payments for the 700mhz spectrum that will lead to higher depreciation and amortisation costs.
Similarly, DBS Group Research expects StarHub’s depreciated expenditure to rise in FY2025 due to capital expenditure on the 700mhz spectrum. “We project an 11% earnings CAGR over FY2025 and FY2027 and a yield of –6% in FY2025,” notes analyst Sachin Mittal.
He points out that Ensign, StarHub’s cybersecurity venture, is poised to grow at a CAGR of 20% between 2025 and 2027. “We expect Ensign to go public by FY2025 as it achieved operating profit breakeven in FY2023. We estimate Ensign alone to be worth between $750 million and $1.2 billion. Given StarHub’s 55.73% effective stake in Ensign, the stake is worth between 24 cents and 40 cents per share. This represents 19% to 32% of StarHub’s market cap of $2.2 billion.”
