CGS International
August 14, 2025
StarHub and ASEAN Telco Sector: Competitive Pressures, Financials, and ESG Trends – Full Analysis for Investors
Executive Summary: StarHub’s Strategic Pivot Amid Rising Competition
StarHub’s first-half 2025 results fell short of expectations, with core net profit at S\$62m, down 23% year-on-year. This represented just 41% of CGS International and 40% of Bloomberg consensus estimates for the full year. The company is responding to heightened competition in Singapore’s mobile segment by adopting a more aggressive stance for the remainder of 2025, focusing on squeezing smaller players to drive long-term market repair. Meanwhile, StarHub continues to build out its enterprise and cybersecurity operations, which are showing robust revenue growth even as mobile and entertainment segments lag.
Key points:
- 1H25 core net profit: S\$62m (-23% yoy)
- Interim dividend: 3 Singapore cents, in line with expectations
- Mobile segment revenue declined 3% quarter-on-quarter
- Enterprise and cybersecurity segments are the main growth drivers
Financial Guidance and Strategic Changes
StarHub’s management announced a reduction in FY25 EBITDA guidance, now targeting 88-92% of FY24 EBITDA, reflecting a more aggressive competitive strategy. This shift has led to a downward revision in profit forecasts:
- FY25/26/27 core net profit estimates lowered by 25.8%, 21.1%, and 20.0% respectively
- Target price methodology changed from DCF to GGM, resulting in a lower TP of S\$1.19 (was S\$1.30)
The sale of M1 to Simba provides StarHub with greater financial flexibility, enabling investment in regional enterprise and cybersecurity while intensifying competition in domestic mobile services. Importantly, StarHub maintains its commitment to dividends, with guidance set at the higher of 6 cents/share or 80% of underlying profit (excluding one-offs).
Valuation Overview and Dividend Support
- Hold rating maintained, TP S\$1.19 (previously S\$1.30)
- Valuation: 18.3x FY25F P/E; 5% dividend yield offers downside protection
- Key risks: Market repair speed, M&A pricing, cost optimization (DARE+ program)
Major shareholders include Temasek Holdings (55.8%), NTT Group (9.9%), and Vanguard Group (1.1%). The analyst responsible is Prem Jearajasingam.
StarHub: Financial Performance Snapshot
| Year |
Revenue (S\$m) |
Operating EBITDA (S\$m) |
EBITDA Margin |
Net Profit (S\$m) |
Core EPS (S\$) |
Core EPS Growth |
FD Core P/E (x) |
DPS (S\$) |
Dividend Yield |
EV/EBITDA (x) |
Net Gearing |
ROE (%) |
| Dec-23A |
2,373 |
467.4 |
19.7% |
149.7 |
0.092 |
75.6% |
12.98 |
0.067 |
5.63% |
5.97 |
90% |
28.9% |
| Dec-24A |
2,368 |
460.3 |
19.4% |
160.6 |
0.080 |
-13.0% |
14.92 |
0.062 |
5.21% |
6.00 |
78% |
23.5% |
| Dec-25F |
2,382 |
407.1 |
17.1% |
98.0 |
0.065 |
-18.8% |
18.34 |
0.060 |
5.02% |
7.24 |
101% |
18.5% |
| Dec-26F |
2,448 |
437.4 |
17.9% |
133.4 |
0.077 |
19.0% |
15.41 |
0.062 |
5.19% |
6.67 |
93% |
21.6% |
| Dec-27F |
2,512 |
452.5 |
18.0% |
145.9 |
0.084 |
9.3% |
14.10 |
0.068 |
5.67% |
6.34 |
83% |
22.6% |
Segment Performance: Revenue Breakdown
- Mobile: 30% of service revenue; 2Q25 revenue fell 3.1% qoq and 6.6% yoy to S\$134.9m
- Entertainment: Revenue declined 2.8% qoq and 10.3% yoy to S\$49m
- Broadband: Slight decrease qoq, but up 4.1% yoy to S\$63.9m
- Enterprise: Grew 25.9% qoq and 20.4% yoy to S\$264.3m, highlighting StarHub’s pivot
- Sale of equipment: S\$76.2m, flat qoq, up 7.8% yoy
ASEAN Telco Sector Valuation Matrix
| Company |
Ticker |
Rec. |
Market Cap (US\$m) |
Core P/E CY25F |
Core P/E CY26F |
P/BV CY25F |
P/BV CY26F |
Recurring ROE CY25F |
Recurring ROE CY26F |
EV/EBITDA CY25F |
EV/EBITDA CY26F |
Dividend Yield CY25F |
Dividend Yield CY26F |
| Telekom Malaysia |
T MK |
Add |
6,596 |
14.7 |
13.0 |
2.5 |
2.4 |
17.3% |
18.9% |
6.3 |
5.4 |
4.0% |
4.6% |
| Axiata Group |
AXIATA MK |
Add |
5,896 |
43.5 |
28.2 |
1.1 |
1.1 |
2.6% |
4.0% |
3.6 |
3.9 |
3.6% |
3.9% |
| CelcomDigi Bhd |
CDB MK |
Hold |
10,710 |
24.7 |
20.3 |
2.8 |
2.7 |
11.3% |
13.6% |
9.8 |
9.0 |
3.8% |
4.8% |
| Maxis Berhad |
MAXIS MK |
Hold |
6,557 |
18.5 |
18.0 |
4.5 |
4.5 |
24.4% |
25.0% |
8.8 |
8.4 |
5.0% |
5.4% |
| SingTel |
ST SP |
Hold |
52,347 |
24.8 |
22.1 |
2.4 |
2.4 |
10.0% |
10.9% |
15.1 |
13.8 |
4.2% |
4.9% |
| StarHub |
STH SP |
Hold |
1,600 |
18.3 |
15.4 |
3.4 |
3.3 |
17.9% |
21.6% |
7.5 |
6.7 |
4.8% |
5.2% |
| PT Telkom |
TLKM IJ |
Add |
20,544 |
13.8 |
13.2 |
2.3 |
2.2 |
16.8% |
16.9% |
5.2 |
5.1 |
5.8% |
6.1% |
| Indosat |
ISAT IJ |
Add |
4,499 |
14.9 |
12.0 |
2.1 |
1.9 |
14.4% |
16.6% |
4.6 |
4.3 |
4.1% |
4.7% |
| XLSmart |
EXCL IJ |
Add |
3,269 |
291.0 |
28.1 |
1.1 |
1.1 |
0.5% |
4.0% |
5.3 |
4.9 |
0.2% |
2.1% |
| Adv Info Services |
ADVANC TB |
Hold |
27,705 |
22.4 |
21.5 |
8.8 |
8.5 |
39.0% |
40.3% |
9.3 |
8.6 |
3.9% |
4.2% |
| True Corp |
TRUE TB |
Add |
11,548 |
30.5 |
17.0 |
4.7 |
4.1 |
15.4% |
25.6% |
6.8 |
6.1 |
1.6% |
2.9% |
ESG Performance: Accelerating Sustainability and Governance
StarHub has made notable improvements in its environmental performance, reducing carbon emissions by 16.7% in 2024 (from 2021 baseline) and sourcing 17.2% of its energy from renewables, aiming for 30% by 2030. The company targets a 50% reduction in scope 1 and 2 emissions by 2030, with a net-zero goal by 2050.
Key ESG highlights:
- Ranked world’s most sustainable wireless telecom provider in 2025 by Corporate Knights
- Senior management remuneration now linked to ESG KPIs (from 2024)
- Cybersecurity revenue up 16% in FY23 and 12% in FY24, despite data breach incident in 2021
While the risk of further breaches is not currently factored into forecasts, StarHub has responded with robust data protection measures.
Balance Sheet and Key Ratios
| Metric |
Dec-23A |
Dec-24A |
Dec-25F |
Dec-26F |
Dec-27F |
| Total Cash & Equivalents (S\$m) |
502 |
540 |
344 |
367 |
402 |
| Total Liabilities (S\$m) |
2,330 |
2,354 |
2,360 |
2,353 |
2,350 |
| Shareholders’ Equity (S\$m) |
569 |
608 |
603 |
631 |
661 |
| Revenue Growth |
1.97% |
-0.23% |
0.61% |
2.77% |
2.60% |
| Operating EBITDA Growth |
12.1% |
-1.5% |
-11.6% |
7.4% |
3.4% |
| Operating EBITDA Margin |
19.7% |
19.4% |
17.1% |
17.9% |
18.0% |
| Net Cash Per Share (S\$) |
-0.37 |
-0.34 |
-0.45 |
-0.43 |
-0.41 |
| ROIC (%) |
11.2% |
11.9% |
8.3% |
8.8% |
9.5% |
Key Operational Drivers: Subscriber Data and ARPU Trends
- Total mobile subscribers: 2,317,000 in 2025F, stable through 2027F
- Mobile postpaid ARPU: S\$26.0 in 2025F, steady to 2027F
- Mobile prepaid ARPU: S\$6.0 in 2025F, slight decrease to S\$6.0 in 2027F
- Entertainment subscribers: 281,000 in 2025F, declining to 239,000 in 2027F
- Entertainment ARPU: S\$45.5 in 2025F, stable to 2027F
- Broadband subscribers: 580,000 in 2025F, rising to 584,000 in 2027F
- Broadband ARPU: S\$35.4 in 2025F, increasing to S\$36.2 in 2027F
Regulatory, Legal, and Regional Distribution Considerations
The report details distribution restrictions and regulatory compliance across global jurisdictions, emphasizing that the content is intended for institutional and professional investors in accordance with local laws. Specific rules and exemptions apply in Australia, Canada, China, France, Germany, Hong Kong, Indonesia, Ireland, Malaysia, New Zealand, Singapore, South Korea, Spain, Sweden, Switzerland, Thailand, UAE, UK/EEA, and the United States.
Conclusion: Outlook and Investment Recommendations
StarHub faces a challenging competitive landscape in Singapore’s telco sector, prompting adjustments in financial guidance and strategic focus. While mobile and entertainment segments remain under pressure, enterprise and cybersecurity present growth opportunities. The stock’s valuation is capped by competitive risks, but its attractive 5% dividend yield offers downside support. ESG initiatives and operational efficiency improvements are poised to enhance investor interest moving forward.
StarHub is rated Hold with a target price of S$1.19, reflecting the current risk-reward balance in a rapidly evolving market. Investors should closely monitor competitive dynamics, cost optimization execution, and regional sector trends as StarHub and its ASEAN peers navigate this period of transformation and sustainability focus.
