Mobile business remains resilient. By segments, mobile revenue grew 1.0% YoY and 2.7% QoQ to S$271.9m, driven by both pre-paid segment on the YoY basis and post-paid business on the QoQ basis. While PayTV business saw 1.6% YoY and 1.5% QoQ declines to S$100.5m, mainly hit by a 3.4% QoQ slide in monthly ARPU to S$56/subscriber; we note that there was a marginal 0.4% QoQ user growth. Broadband business was its worst performer, down 3.2% YoY and 3.4% QoQ to S$60.3m, after suffering a 7.3% QoQ slide in monthly ARPU to S$51 due to plan downgrades; monthly churn also rose from 1.1% (over the last four quarters) to 1.4%. Lastly, fixed network services grew 7.3% YoY and 1.1% QoQ to S$80.0m, where data & internet services contributed 85% of the amount.
Maintains stable outlook for 2H09. Although management has yet to see clear signs of a sustainable recovery in consumer and enterprise spending, which is further exacerbated by the current flu pandemic, it has maintained its stable guidance for the rest of 2009. It expects service revenue to maintain at 2008 level; EBITDA margin on service revenue to remain around 32%; cash capex not to exceed 11% of revenue; and its S$0.045/ quarter cash dividend, or S$0.18 total for FY09.
Maintain BUY with S$2.88 fair value. The biggest concern in 2H09 will be the upcoming auction of the 2010/2012 Barclays Premier League broadcasting rights, which we believe should still be won by StarHub albeit at a higher cost - it should be able to pass on the bulk of the cost to its sports subscribers (with potential 20% price hike) and remain profitable. Beyond 2009, we see the possibility of StarHub entering into the enterprise broadband market in a bigger way with the NBN (national broadband network) vs. its limited penetration currently. We continue to like StarHub for its defensive earnings potential and attractive dividend yield of 8.0%. Maintain BUY with S$2.88 fair value.
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