Brief Overview
StarHub Limited reported disappointing first-half results, with 1H26 revenue and EBITDA representing just 41% and 43% respectively of Phillip Securities Research’s full-year forecasts. Revenue deterioration affected not only mobile services but all business divisions, with mobile service revenue declining 10.5% year-on-year to S$245 million. The analyst has lowered FY26e EBITDA estimates by 10% to S$325 million whilst raising the target price to S$1.07 from S$0.95.
Investment Positives
The analyst identified limited positive developments during the review period. StarHub reported that its mobile division was experiencing improved metrics due to 5G+ unlimited plans. The company indicated that transitioning customers to these premium plans was leading to higher customer satisfaction levels and fewer service-related issues. Management suggested this 5G+ strategy was gaining traction in the market.
However, the analyst noted scepticism regarding these claimed benefits, as the financial results have not yet reflected any meaningful improvement from the 5G+ initiative.
Investment Negatives
The investment challenges facing StarHub are comprehensive, affecting all four business segments. Mobile services suffered the steepest decline, falling 10.5% year-on-year to S$245 million, whilst also declining 2% quarter-on-quarter in 2Q26. The broadband and entertainment division experienced an 8.5% year-on-year decline to S$208 million, with the securing of English Premier League rights failing to deliver any notable performance improvement.
Underlying profitability deteriorated significantly, with PATMI collapsing by at least 74% year-on-year to S$12.4 million in 1H26, excluding contributions from Ensign. Mobile competition is creating substantial pressure across multiple revenue streams, including roaming, international direct dialling, voice and data subscriptions, and value-added services. Average revenue per user declined 5% quarter-on-quarter to S$20 per month, contradicting management’s claims about 5G+ plan benefits.
Outlook
The analyst expects StarHub to dispose of its remaining stake in Ensign back to its parent company, potentially during FY26. The proceeds from this divestment could provide funding for future acquisitions and help revitalise mobile operations. Ensign currently represents a 38.92% associate holding for StarHub.
Recommendation & Target Price
Phillip Securities Research maintains a NEUTRAL recommendation on StarHub Limited. The target price has been raised to S$1.07 from the previous S$0.95, incorporating Ensign’s book value at a 50% discount following the partial divestment.
Frequently Asked Questions
Q: Why did StarHub's results fall short of expectations?
A: 1H26 revenue and EBITDA were only 41% and 43% respectively of full-year forecasts, partly due to the absence of Ensign, which is now an associate rather than a subsidiary.
Q: Which business divisions are struggling?
A: All four segments are experiencing declining revenue, led by mobile services which fell 10.5% year-on-year to S$245 million, and broadband and entertainment which declined 8.5% year-on-year to S$208 million.
Q: How has profitability been affected?
A: Underlying PATMI collapsed by at least 74% year-on-year to S$12.4 million in 1H26, excluding Ensign contributions.
Q: Are there any positive developments?
A: StarHub claims improved metrics from 5G+ unlimited plans leading to higher customer satisfaction, though the analyst notes these benefits are not yet visible in financial results.
Q: What is the outlook for Ensign?
A: The analyst expects StarHub to dispose of its remaining 38.92% stake in Ensign back to its parent company, potentially in FY26, with proceeds potentially funding acquisitions and mobile operations.
Q: Why was the target price raised despite poor results?
A: The target price increased to S$1.07 from S$0.95 due to incorporating Ensign's book value at a 50% discount following the partial divestment.
Q: What are the main competitive pressures?
A: Mobile competition is pressuring roaming, international direct dialling, voice and data subscriptions, and value-added services revenues across StarHub's operations.
This article has been auto-generated using PhillipGPT. It is based on a report by a Phillip Securities Research analyst.
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