Broker: Maybank Research Pte Ltd
Date of Report: July 7, 2025

StarHub: Navigating Intense Competition and Unlocking Enterprise Growth in Singapore’s Telecom Sector

Overview: StarHub’s Strategic Position in a Challenging Market

StarHub, Singapore’s second-largest wireless service provider and leading pay TV operator, is adapting to a fiercely competitive telecommunications landscape. With four Mobile Network Operators (MNOs) and seven Mobile Virtual Network Operators (MVNOs) crowding the market, competition remains intense across both mobile and fixed broadband segments. Despite these headwinds, StarHub is expanding its subscriber share in all three key segments: premium (StarHub), digital (Giga), and value (Eight). The share gap between StarHub and M1 has now widened to 6 percentage points.

Consumer Downtrading: A Persistent Headwind

The Singapore market is witnessing sustained consumer downtrading, as subscribers shift from premium to value plans.
This trend is expected to persist through 2027–28, putting continued pressure on StarHub’s consumer business.
Management remains open to industry consolidation but notes that there is currently no timeline or specific details available.

Enterprise Segment: Offsetting Consumer Weakness

While consumer segment softness endures, StarHub’s enterprise business is experiencing robust growth, particularly in managed services and cybersecurity. Notable highlights include:

• Winning the JTC Punggol Digital District (PDD) project, which management sees as a model for replication in other markets.
• StarHub’s cybersecurity arm, Ensign, continues to post double-digit revenue growth, with a focus on research & development and talent acquisition.

This enterprise expansion provides long-term scalability, although near-term margin expansion at Ensign could be constrained by ongoing investment in talent and R&D. Notably, the structurally lower margins of the enterprise segment compared to consumer services could weigh on group profitability if consumer softness persists.

Financial Strength: Balance Sheet and Share Buybacks

StarHub maintains a strong balance sheet with net leverage at 1.3x and cash reserves of approximately SGD600 million. This provides flexibility for acquisitive M&A, although cash balances are expected to decline following the 700MHz spectrum payment. Mobile capital expenditure may rise slightly as the new spectrum deployment begins.
A SGD50 million share buyback program is in place, with SGD36 million still available. This is seen as offering downside support to the stock.

Stock Performance and Valuation Metrics

StarHub’s share price stands at SGD 1.17, with a 12-month target price of SGD 1.10. The stock is currently rated HOLD.

• 52-week high/low: SGD 1.29 / SGD 1.12
• Market capitalization: SGD 2.0 billion
• Major shareholders:
  • Singapore Technologies Telemedia Pte Ltd: 55.8%
  • Nippon Telegraph & Telephone Corp.: 9.9%
  • The Vanguard Group, Inc.: 0.9%

Key Financial Performance

Operational Highlights and Key Metrics

• Revenue is forecast to grow modestly, with annual increases of 0.8–1.2% through FY27E.
• EBITDA margin is expected to stay strong, ranging from 18.6% to 20.1% over the forecast period.
• Free cash flow yield is projected to improve, reaching 11.8% by FY27E.
• Capex as a percentage of revenue is set to hover around 8–9%.
• Dividend payout ratio is expected to remain robust, between 66.7% and 77.4%.

Liquidity and Leverage

Cash & short-term investments: SGD 540 million in FY24A, projected to decrease to SGD 271.5 million in FY25E post-spectrum payment.
Net gearing (including perpetuals): Expected to rise to 100.9% in FY25E before moderating to 67.0% in FY27E.
Net interest cover and Debt/EBITDA ratios indicate manageable leverage, providing comfort for further M&A or investment.

Segment Analysis: Consumer Versus Enterprise

Consumer Segment

– Facing ongoing competitive pressure and subscriber downtrading. – StarHub continues to grow market share in premium, digital, and value segments. – Margin pressure is likely to persist as value segments expand faster than premium ones.

Enterprise Segment

– Growth driven by managed services and cybersecurity (Ensign). – Enterprise revenues are increasing at a double-digit pace, especially in cybersecurity. – Margin expansion may be capped in the near term due to significant investments in R&D and talent.

Shareholder Value and Outlook

StarHub’s ongoing share buyback program provides downside protection for shareholders.
The company’s healthy balance sheet supports both organic growth and potential acquisitions.
Management remains watchful for consolidation opportunities but has not provided a timeline.

Conclusion: Balanced Approach Amid Market Challenges

StarHub is skillfully navigating a tough operating environment by growing its enterprise business to offset consumer headwinds. The company’s strategic investments in managed services and cybersecurity, coupled with prudent balance sheet management, position it well for long-term growth. However, persistent consumer downtrading and competitive pressures could keep overall profitability in check, at least in the near term.
With a stable dividend yield, strong cash flows, and a disciplined capital structure, StarHub remains a HOLD for investors seeking steady income and exposure to Singapore’s resilient telecommunications sector.

Other Companies Mentioned

M1: Owned by Keppel Corp, referenced as a key competitor, with StarHub growing its market share lead over M1 by 6 percentage points.
Keppel Corp: Owner of M1, not rated in this report.

Contact Information

For further insights, investors may contact Maybank Research Pte Ltd or the covering analyst, Hussaini Saifee.

Disclaimer

The opinions and projections in this article are for informational purposes only and should not be construed as investment advice. Investors are encouraged to consult with their financial advisor before making investment decisions.