StarHub Ltd 3Q2025 Business Performance Update: Key Insights for Investors

Overview

StarHub Ltd has released its 3Q2025 Business Performance Update, presenting a mixed set of results amid continued market competition and strategic realignment. This report contains several critical developments and financial outcomes that investors should closely monitor.

Key Financial Highlights

• Total Service Revenue: S\$470.3 million for 3Q2025, down 4.7% year-on-year (YoY). Nine-month service revenue for 2025 reached S\$1,446.5 million, a modest increase of 0.4% YoY.
• Net Profit After Tax (NPAT): S\$26.2 million for 3Q2025, a steep decline of 35.3% YoY. For the nine months, NPAT was S\$88.2 million, down 25.0% YoY excluding non-recurring items.
• EBITDA: S\$105.9 million for 3Q2025, down 7.6% YoY. Nine-month EBITDA was S\$309.2 million, down 8.6% YoY.
• Free Cash Flow: Despite the lower profits, Free Cash Flow in 3Q2025 surged to S\$123.6 million (vs S\$65.5 million in 3Q2024), largely due to the absence of spectrum payment this quarter. For the nine months, excluding spectrum payment, Free Cash Flow was S\$139.8 million, down 16.4% YoY.
• Leverage Ratios: Net Debt to TTM EBITDA (excluding spectrum payment) rose to 1.41x as of 30 Sep 2025, up from 1.29x at end-2024. Interest coverage ratio remains healthy at 10.1x.

Important, Potentially Price-Sensitive Developments

One-Off Spectrum Forfeiture Payment

A notable event impacting NPAT was a one-off forfeiture payment of S\$14.1 million for the return of one 700 MHz spectrum lot in 2Q2025. This significantly weighed on reported profits for the period. Investors should note this is a non-recurring expense and may affect perceptions of underlying profitability.

Enterprise and Cybersecurity Growth

• Regional Enterprise Segment: Registered a 1.5% YoY growth in 9M2025, driven by a 3.2% rise in Managed Services revenue, despite a 7.8% decline in 3Q2025 due to timing of project recognitions.
• Cybersecurity Services: A standout performer, with revenue up 17.0% YoY to S\$263.7 million in 9M2025. This segment’s robust expansion is a strategic highlight and could underpin future growth and market re-rating.
• Order Book Growth: The enterprise segment saw a 5.7% YoY increase in order book value, reflecting sustained future demand.

Consumer Segment Challenges and Market Actions

• Mobile Segment: Service revenue fell 10.1% in 3Q2025 and 6.9% in 9M2025, attributed to intense price competition and declining revenues from roaming, IDD, VAS, and excess data usage.
• Broadband Segment: Revenue declined 4.4% in 3Q2025 but rose 1.4% over 9M2025, benefiting from migration to higher-bandwidth plans, offset by a one-time reallocation adjustment.
• Entertainment Segment: Revenue dropped 4.3% in 3Q2025 and 7.5% in 9M2025.

In response to competitive pressures, StarHub launched new 5G Unlimited+ mobile plans (unlimited data, roaming, no contract), rolled out fresh broadband offerings, and entered a strategic partnership with Mediacorp to strengthen its entertainment platform.

Cost Optimisation Plans

StarHub has initiated a multi-year strategic cost programme targeting savings of approximately S\$60 million over FY2026-FY2028. Key pillars include legacy decommissioning, network automation, systems re-architecture, and business simplification. Ongoing efforts are expected to identify further savings, positioning the company for scalable and sustainable growth.

Strategic Roadmap and Shareholder Returns

• StarHub reaffirms its commitment to its dividend policy and total shareholder returns, signalling ongoing focus on rewarding investors.
• The company is actively pursuing M&A to drive inorganic growth, with recent acquisitions and integration underway in the entertainment segment. Execution of ‘best-of-both’ strategies is expected to enhance brand positioning and scale.
• Free Cash Flow generation remains healthy, supporting future investments and shareholder returns despite current profit pressures.

Potential Share Price Impact

The report contains several price-sensitive items:

• The sharp drop in reported NPAT and EBITDA may cause near-term share price volatility.
• Excluding non-recurring items, underlying profit contraction remains a concern and could weigh on sentiment.
• Strong growth in Cybersecurity and Managed Services, coupled with a rising order book, presents medium-term upside if the company can further mitigate consumer segment declines.
• Cost optimisation plans and continued commitment to dividends and cash flows may support share price resilience if execution stays on track.
• Ongoing competitive pressure in Mobile and Broadband remains a key risk to future earnings and share price performance.

Conclusion

StarHub’s 3Q2025 update presents both challenges and opportunities. Investors should monitor the company’s execution on cost savings, enterprise/cybersecurity expansion, and defensive actions in the consumer segment. While near-term earnings pressure persists, strategic actions and healthy cash flow generation could provide medium-term upside, subject to successful delivery on growth and efficiency targets.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Investors are advised to review the full company disclosures and consult their financial advisors before making any investment decisions. The analysis is based on publicly available information and may include inferred interpretations.

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