Q2 2026 StarHub Ltd Earnings Call
Speaker #1: Agent, and this morning we have with us our senior management, led by our Chief Executive, Nikhil Eapen. Deputy CEO and Chief of Consumer Business, Matt Williams.
Speaker #2: Good morning.
Speaker #1: CFO, Jacky Lo.
Speaker #3: Good morning.
Speaker #1: And Chief of Enterprise Business Group, Tan Kate Yong.
Speaker #2: Good morning.
Speaker #1: As usual, Nikhil and senior management will bring you through a quick presentation before opening the floor to Q&As thereafter. Nikhil, over to you, please.
Speaker #2: Thank you very much, Crystal. And first of all, good morning to all of you, and welcome to our Q2 2026 earnings call. and as always, over many years, thank you for your time and attention to the StarHub story.
Speaker #2: So, a lot of what I know we are all collectively focused on is what we call an incredibly dynamic consumer marketplace. but also a marketplace, while corrosive, is complex and going through change.
Speaker #2: with downsides, perhaps also some opportunities. So as we have been doing for the past 4 quarters, I'd like to start by updating you on our progress on where we stand on the four strategic pillars that we outlined and set out at the end of 2025, frankly.
Speaker #2: So first, consumer, and this is actually where I'd like to spend a bit more time, talking about some of the things that preoccupy all of us as a collective.
Speaker #2: the market, first of all, as we know, which has unfortunately after a period of some minor stabilization at the end of '25 and the beginning of '26, has now returned to a period of corrosive competition, driven by the incumbent with responses from the smaller operators, and unfortunately ultimately this will cannibalize and increase transactional churn for all.
Speaker #2: Now, our focus on the other hand, as you know, has been on multi-brand and multi-market segmentation, plus improving the monetization that we have, by focusing on quality and customer value, not price.
Speaker #2: So therefore, what have we been doing over the past quarter? First, monetization. So we have focused on moving our subscribers onto our higher-value 5G Plus plans under our StarHub brand.
Speaker #2: So through this, they get better products, more value, and we see materially better yield metrics on all fronts when we do this: higher R2, lower churn, higher NPS.
Speaker #2: So this move of our subscribers is proceeding at pace on our 5G Plus plans, as Matt will talk about some more. Second, within consumer, multi-brand, multi-market segmentation.
Speaker #2: So the market, as we've been talking about, is split between three segments: premium, largely us and Singtel, digital, which is Circles, MyRepublic, which are the MVNOs, as well as Gomo and Giga, which are the in-house brands.
Speaker #2: And of course, a value segment, which is fast, large, and, and growing. so Simba, Eight, now High, parts of M1 and M1 Max, and what the market is seeing and has been seeing is premium and digital shifting to value, reducing industry R2 as customers downgrade their plans.
Speaker #2: On the other hand, what we are doing is driving leading brands across these three segments: premium with StarHub, digital with Giga, which has been holding its own, frankly, and Eight, which is the fastest growing brand in Singapore, with explosive year-on-year growth, but even here we are improving yield as we push our customers to higher price, higher value plans, and Matt will update on this.
Speaker #2: Now, also notably, we have three brands operating across mobile and broadband: StarHub, Eight, and MyRepublic, and hence able to harvest and cross-sell effectively. So the consumer market has deteriorated overall over past years, as we know, but we have softened this to some degree by holding and in time even growing our revenue market share, and as you probably know, our lead to the number 3 operator has now been extended to about 650 basis points.
Speaker #2: Third, within consumer, we are driving consolidation as we all know the genie is kind of out of the bottle, for the sector here. So you saw us acquire MyRepublic broadband in phases, and we now own 100% of a fantastic broadband business, which dominates the high-value gamer and geek segment.
Speaker #2: a couple of years ago we launched MyRepublic 5G, and now we are moving MyRepublic 4G onto our platform from their existing network provider, which brings us many, many tens of thousands of valuable subscribers.
Speaker #2: And this follows our fold in a red one. So we believe there will be more to come of this, as now there are very few MVNOs, and the MVNO business model which pays out huge revenue share to their MNO host, frankly, is not sustainable in a market like this.
Speaker #2: And of course, there is the elephant in the room, which we must all acknowledge on Simba's acquisition of M1, which has fallen away. The last and important factor is industry parity, and by this I mean the fourth operator, which has had a free ride over the past many years without the same regulatory impositions, and therefore with an arbitraged cost structure that allowed it to pull the market down, and in the process take a lot of market share.
Speaker #2: So we have seen their acquisition of M1 fall away, and we also know that they very, very imminently have to fulfill now the same cybersecurity and resilience requirements as a CII provider, like the rest of us do.
Speaker #2: And we also note the infractions that they have been found to have committed, which in part have lent themselves in the past to cost advantage.
Speaker #2: So with increased cybersecurity and resilience requirements, imposed by the regulator, together with a sharper focus by the regulator on this kind of malpractice, this will eliminate the structural cost advantage that they have had, and will help market sustainability under any scenario.
Speaker #2: So those are the four prongs of the first pillar. On consumer. So on enterprise, as I said, the long-term government and enterprise spend environment in Singapore is strong.
Speaker #2: Smart Nation, Digital, Cloud, and AI transformation from government and enterprise continues. But shorter term, there are headwinds from a rising hardware cost, so the way buyers are responding to this is deferring some of their spend.
Speaker #2: and also we see a lot of clients insourcing app development away from the IT service providers that we typically used. But overall, we would say our business and regional enterprise is well positioned because we get the long-term demand, while being less exposed to some of the shorter-term headwinds.
Speaker #2: And we are addressing this demand for Smart Nation and transformation in a differentiated way, as we've talked about, with modern digital infrastructure, which is a platform model: faster to deploy, more scalable, more value for our customers with better margins.
Speaker #2: So you know, in Q1 you saw some delay in revenue recognition with project timing. And as you can see from our numbers, if you back, if you back things out, in Q2 we are very much back to growth.
Speaker #2: revenue was up 5% across all of regional enterprise, including legacy lines. And up 24%, actually, for managed services. we also saw our legacy lines older grow, for instance, our enterprise mobility business, to call out grew well for the first half year on year.
Speaker #2: as we were able to take market share with clients who actually trust us to deliver network quality with a resilience that Now, we had also denoted that 2026 was our year for scaling enterprise, and there are many ways in which we are doing this.
Speaker #2: The first and the most visible way for all of us, which we disclosed to you, is our order book, our one order book. And we continue to grow our one order book at, frankly, explosive rates, almost 50% year on year.
Speaker #2: With a large deals with large government and enterprise customers. And these are multi-year revenues. So with this kind of order book growth, what that means is every year we start the year with committed revenue at a higher and higher percentage of targeted revenue, allowing us to compound towards growth.
Speaker #2: Second, we are scaling by continuing to build our delivery muscle. Which by insourcing allows us to control our delivery, scale faster, deliver for our customers better, and improve our margins.
Speaker #2: Number three, we will accelerate building this delivery muscle with small-scale selective M&A that has disproportionately positive impacts on building delivery scale and insourcing margins relative to their size.
Speaker #2: And we have identified targets that we are engaged with. Number three, pillar, cyber. Now, on cyber, we have always said we are a major telco running critical infrastructure serving government and large enterprises, and we have all seen the nation-scale threats, in the media.
Speaker #2: So we will continue investing in cyber, resilience, and technology overall. And 2026 is an investment year, this drops off in 2027. So all telcos, all critical infrastructures providers, beyond telcos, will have to invest but we are ahead of the game, certainly versus the smaller players who will need to spend and modernize to catch up, and perhaps we can help them in doing so.
Speaker #2: Now, these cyber investments add to the security of our platform. They secure ourselves and they secure the modern digital infra platform we are serving our government and enterprise customers with.
Speaker #2: there is strong societal awareness of this. There is strong enterprise awareness of this, which translates into the differentiation of the platform that we bring to bear on behalf of our customers.
Speaker #2: Now, last and important, you saw that we completed the divestiture to our co-shareholder of the 17% stake. Associated with the assignment of rights in Ensign.
Speaker #2: And this has allowed us to achieve material proceeds and register a large gain for the first half of 2026. So hence, we are booking a profit of over $250 million for the first half.
Speaker #2: and also, as you know, we retain a 38% stake, and we continue discussions with our co-shareholder for monetization of this remaining stake. And then the fourth pillar, cost optimization.
Speaker #2: We have a large and growing pipeline of cost savings with the automation and simplification opportunities created by our transformation today. As Jacky will discuss, we are very much on track with these run rate savings with it with the 2028 target of $70 million per annum.
Speaker #2: Two points. First, in a stabilized market, this will flow to profitability uplift, unlike our prior day-plus run rate cost savings, which achieved targets but with extreme price competition.
Speaker #2: the benefit of which went to the consumer. Number two, we are working to increase the savings target, leveraging the automation and AI, increasingly embedded in much that we do.
Speaker #2: So to round off on this page and the four pillars, underlying this are three things. First, our fortified balance sheet with large cash balances further fortified by the partial divestiture of our stake in Ensign.
Speaker #2: And more to come. M&A, whether for consumer consolidation, as we have been doing, or for enterprise, selectively to accelerate our scaling. And number three, we are positioned on focusing for superior TSR in the future, against what we see as current market displacement, while continuing our dividend commitment to shareholders.
Speaker #2: Frankly, without stress, given our balance sheet. So with that, I'd like to do a quick snapshot of our 2026 first half financial performance. First, our revenue for first half was $744 million, down about 7% year on year.
Speaker #2: This was driven by material declines in consumer year on year, with the hyper-competition that we've seen. Revenue, $744 million, down about 7% year on year.
Speaker #2: This was driven by material declines in consumer year on year, with hyper-competition and a downward rebasing of ARPU. This was offset a bit when we convert customers to our new 5G Plus plans, because there we increase ARPU.
Speaker #2: Our EBITDA for the first half was $159 million, with the year-on-year reduction in revenue from the consumer segment amplified in percentage terms. Because we have a largely fixed-cost structure, so it's really telco operating leverage, which, has been working the wrong way as it has in Singapore.
Speaker #2: And for us, over the last year. Overall, our underlying net profit after tax further reflected this revenue and EBITDA reduction, further amplified, but also with the depreciation and interest expense from our two bands of $700 megahertz spectrum, kicking in this half, which we had to take on at prices set in set at the 2017 level auctions.
Speaker #2: Notwithstanding the above, our overall reported net profit after tax was $256 million for the first half 2026, including our gain from the Ensign partial divestiture.
Speaker #2: Which fortified our capital position and positions us to drive long-term TSR through other strategies that we've outlined. And with this residual stake that we had, which based on this gain is worth about $322 million, we are working on further monetization, potentially executable within 2026.
Speaker #2: So with that, I'd like to hand off to Jacky.
Speaker #1: Thank you, Nikhil. Let me build on Nikhil's remarks by highlighting a few financial points for the first half. The number on this slide are presented on the proforma basis, excluding the financial results of Ensign for all periods presented.
Speaker #1: The first half continues to reflect a challenging operating environment, particularly in consumer, where competition remained intense and sector headwinds pres persisted. Against that backdrop, we kept operating expenditures broadly flat year on year, at $852.2 million.
Speaker #1: Helped by lower cost of sales and continued cost discipline across the board. Other income was higher than last year, primarily due to income grants, and was broadly in line with our expectations.
Speaker #1: EBITDA came in at $158.6 million. Reflecting lower gross profit from the business's expec experiencing revenue pressure. Reported net profit attributable to shareholders was $258.1 million.
Speaker #1: Mainly due to the one-off gain of $245.7 million from the termination of the Assigned Rights and the remeasurement of the remaining 39% equity interest in Ensign.
Speaker #1: Excluding this gain, underlying MPAT was $12.4 million. Reflecting lower EBITDA together with higher depreciation and amortization. This is essentially the impact of operating leverage working against us in the current environment.
Speaker #1: Despite these earnings pressures, our balance sheet remains strong. We closed the half with cash and bank balances of $515.7 million, generated operating cash flow of $124.2 million, and delivered positive free cash flow of $40.6 million.
Speaker #1: Looking ahead, we continue to expect free cash flow to remain positive for the full year, even as planned investment in IP, cybersecurity, and network capabilities ramp up in the second half.
Speaker #1: During the quarter, we also completed the refinancing of our June bond maturity using proceeds from the bond issue last November. Our debt maturity profile remains well spread, with no significant refinancing requirements in the near term.
Speaker #1: The only upcoming maturity is approximately $70 million in the first half of 2027, which is manageable given our strong liquidity position. Net debt to EBITDA stood at about $2.4 times, giving us the financial flexibility to continue investing in the business.
Speaker #1: Turning to our outlook, our first half performance is broadly in line with the full year 2026 guidance we provided before. And we remain on track towards our EBITDA outlook of $75 to 80% of 2025 EBITDA.
Speaker #1: Capex payment for the first half were $83.6 million. Representing 8.6% of total revenue. And expected investment activity will increase in the second half as we continue executing our planned programs across ID, cybersecurity, and network optimization.
Speaker #1: After considering current market conditions, industry developments, and our investment commitments over the near to medium term, the broad has declared an interim dividend of $0.03 per share for the half year ended June 30th, 2026.
Speaker #1: We also reaffirmed our dividend outlook of the higher of $0.06 per share for the full year, or in accordance with our dividend policy. With that, I'll hand over to Matt to take you through the consumer update.
Speaker #3: Good morning, everybody. nice to speak again this quarter. so let me take you through, first of all, the financials, for the consumer part of the business, and then I'll talk a little bit about some of the dynamics and the things we've been focused on.
Speaker #3: so first of all, as Nikhil has, foreshadowed, you can see in the panel on the left of this chart, to continue to be a challenging market for us, which is for significant pressure on revenue performance across mobile broadband and entertainment.
Speaker #3: this is really driven by continued price competition broadly across the market, across those product sets. and unfortunately, in the quarter we've seen a resurgence of that price competition intensity, led by the incumbent, but with others in the market, following.
Speaker #3: during that time, we have continued to focus on delivering high-quality experiences for our customers, either in the, high-quality StarHub brand or in the value-orientated brand ACE, or in our digital brands of Giga and, and MyRepublic.
Speaker #3: so in terms of performance, you can see in mobile, we've maintained our strong, number two market share position. we have to spite those challenges being able to hold our ARPU, so that is, flat, and also hold our customer position.
Speaker #3: within that, of course, there is, movement between the different brands. on broadband, we've maintained our number one market share position. And again, being able to hold our ARPU, as well as hold our customer position.
Speaker #3: so overall, quite stable, but with the continuing trends, around the, the market dynamics. By turn to the next page, just to give a bit more color on that.
Speaker #3: As mentioned, unfortunately, in the quarter we saw, a resumption of intense price competition, including from the incumbent, now starting to discount, the headline postpaid plans.
Speaker #3: which is, not a positive development for the market. and the value players then also competing, increasingly at the 10 and $12, as well as the 5 and $6 senior plans.
Speaker #3: with very generous allowances. And unfortunately, we've seen those allowances stretched up over the quarter. On broadband, we've also seen, continued price competition, particularly Airtel below the $30 price point for 10 gigabits per second, which makes it some of the, the cheapest broadbands in the world.
Speaker #3: in terms of our approach, on the StarHub brand, we have continued to lead with the 5G unlimited plus plans. And what we're seeing on those is a very positive and strong customer response.
Speaker #3: we are moving our customers onto those plans. And with those plans, of course, they get unlimited, usage as well as generous roaming allowances. And what we're seeing is, significantly higher customer satisfaction, much higher MPS, much higher brand, desire and performance.
Speaker #3: As well as then, lower service issues. So significant reduction in the cost to serve, as well as then, much lower churn. so building a much healthier, base for us.
Speaker #3: in broadband, we are maintaining our position by surgically responding to the aggression. And then across both mobile and broadband, we have relaunched our hubbing propositions to, offer both products to all of our customers and seeing quite good traction in terms of combining customers on those products.
Speaker #3: we've also then continued to build our market reach, building brand momentum as well as expanding our retail distribution in order to be there where consumers are shopping.
Speaker #3: And finally, I'm pleased to say that, we've been working on the network, and, in this quarter we're awarded the P3 Test Champion, for the quality of our broadband network, leading in Singapore.
Speaker #3: On ACE, we've continued to, have strong momentum on customers in both mobile and broadband, both are now scaling very nicely, but also continuing to see improvements in the ACE ARPU, particularly as customers take 5G plans, stepping up their spend from 4G.
Speaker #3: shifting to MyRepublic, first of all, on the broadband business that we acquired last year, that continues to track very well despite the level of price competition in the market, really because of the strong differentiation for gamers.
Speaker #3: and that, differentiation also extends to new areas like our card arena store at SunTek, which is proving to be incredibly successful and popular in selling, various forms of, playing cards.
Speaker #3: in this business, we also were awarded the Ookla Fastest Broadband, award, again demonstrating that this is the best network for gamers in Singapore. in addition, and as Nikhil called out, there is a shift to consolidate customers onto our network.
Speaker #3: And so we moved or have announced that we've moved, or are moving, sorry, the, 4G MyRepublic customers onto our network to join the 5G MyRepublic customers that are already on our network.
Speaker #3: another positive sign, in the market, building on top of the earlier, shift of the red one in the, you know, customers into, ACE brand.
Speaker #3: so overall, a lot of activity holding our position in the market, but of course, the market remains challenging. with that, I'll pass to Kit Yong.
Speaker #1: Great. Thank you, Matt. Now, well, morning everyone. So let, let me run through the enterprise segment. And if you recall, Q1, we didn't establish a year-on-year growth, right?
Speaker #1: due to timing. And for Q2 itself, we have come back, delivered the projects. And we have, something to have a stronger mo-momentum, waiting for even stronger quarter, ahead of us.
Speaker #1: So Q2, we established a strong, delivery of our projects. And, it really converts our order book into India rapidly. So for enterprise connectivity, it's flat.
Speaker #1: And if you look at the, carrier voice, we are lower by 2.6, due to lower domestic and international lease line revenue. And, and this is a continued trend for telco business.
Speaker #1: And, in fact, the whole industry or enterprise connectivity carrier, invoice, the decline is, negative 4 to 5 percent. And if you look at our blended, so-called decline, actually, we are doing much better than the market.
Speaker #1: And we are holding our fort in keeping our clients. And, we also established quite a good, mobility customer subscriber base as well. So we're keeping our market share.
Speaker #1: So these are the things that is going on. So although it's a bit down, but we are not out, definitely outperforms the, the industry.
Speaker #1: So we are in very good shape for enterprise business as we build momentums. Into our next, few quarters and beyond. All right, next slide.
Speaker #1: So continuing to building our enterprise momentum, look at, order book is still for whole region that we have is, is still at 49, near 50% year-on-year growth.
Speaker #1: And one of the focus on many services. This is our engine of growth. Super critical to us. And, we're making a cautious effort to make sure that we focus on the recurring, many services.
Speaker #1: There's multi-year. And hence, this is a symptom where you see that, we have high order book how come the revenue increase is not that significant.
Speaker #1: Because we are looking at multi-year contracts, recurring revenues. And not solely focusing on one-time off within in-year revenue, that kind of, business in totality.
Speaker #1: But it's part of the business. And that's a cautious shift to make sure that we have, able to have a revenue mix that delivers our revenue and properly this year.
Speaker #1: But also, we might, the next two, three years, five years as well, if ahead of us, just compound recurring revenue that's in our backlog that we can deliver for our clients and build a stronger relationship with our clients.
Speaker #1: And this process, looking at what we are doing sustainable growth, is to really continue to defend and acquire a share of wallets for our telco business, grow our many services that's integrated with our telco business and enterprise, technologies as well.
Speaker #1: And we'll continue to harness our regional integration. In fact, if you look at last year, we're seeing some good wins, right? between Singapore and Malaysia, joint projects, cross-border data center, and even RTS itself.
Speaker #1: We are part of the game. And we are competing as one team for this cross-border projects. Now, it is good enough. No, it's never good enough.
Speaker #1: Because we need to scale our platform business as well. Because the decline of, telco, many services growth, managed to mute the revenue. But we need to grow profitability.
Speaker #1: And that is where scaling platform is a very important element. And how do we scale? Scaling through just selling more hardware. We need to scale through platform.
Speaker #1: Integrating our telecommission network to get mobile, fixed line, internet, enterprise data center, campus network, as one single network, unified network. And with network possibility, with data-driven and we can fight cyber actors in our network through our capabilities we build in our network platform.
Speaker #1: And to make this platform cost efficient, lower the TCO and make it resilient for our clients, we need to also establish capabilities in the east and west technologies that's for the enterprise, segment.
Speaker #1: And it's very critical to us because, cost pressure is real because look at macro, outlook itself, memory price going up, storage going up, technology cost, especially in the western world, is rising rapidly.
Speaker #1: And we got to do a very smart way of managing eastern trust, integrate as part of the platform that we build to give a robust infrastructure for enterprise clients, which they truly appreciate.
Speaker #1: And also our technology partner appreciate us that the ability for us to look at the intricacy of integrating engineering architecture in building our platforms.
Speaker #1: And we've been, if you look at our social media, we're getting good, awards not just for Singapore, in fact, Asia Pac. Our technology partners is giving us allocates that are ability to execute.
Speaker #1: When they compare us with their overall Asia Pac, partners. And, and that is a very good, feedback and recognition and validation from our technology partners.
Speaker #1: And our client appreciate that as well. And with this, that's how we can improve our returns. Drive sustainable and recurring revenue through platform, many services, and this platform lab is services we offer is repeatable, scalable, and brand promo with StarHub branded managed services as our differentiator in the market.
Speaker #1: With that, hand over to Jacky.
Speaker #2: Thank you, Nikhil. Let me give a quick update on our cost optimization program. The key takeaway for the first half is that we have now achieved around 10% of the 70 million annualized savings ambition.
Speaker #2: While still early days, this gives us confidence that the program has moved from planning into execution. And we're extremely set before. This is not about technical cost cutting.
Speaker #2: It's about structurally resetting our cost base by simplifying the business, removing legacy complexity, and improving productivity across our network systems and operating model. Many of the larger network and systems related initiatives naturally have longer implementation timelines.
Speaker #2: So we expect savings to build progressively over the next couple of years, as execution continues. Ultimately, the objective is not just lower cost. It is to improve operating leverage, create capacity to reinvest in the business, and build a stronger, more sustainable operating model.
Speaker #2: With that, I'll hand back to Nikhil for the closing remarks. To conclude.
Speaker #1: Thank you, Jackie. goals for 2026 are very clear. In consumer, our cornerstones are A, driving monetization and yield with a higher value 5G plus plans.
Speaker #1: Under our StarHub brand to drive R2 uplift. B, to drive multi-brand, multi-market segmentation across premium digital and the no-frills segment with our four brands, StarHub, Giga, MyRepublic, and 8.
Speaker #1: Across mobile and broadband, for maximum cross-sell to maximize our revenue market share where our lead is a strong number two, is very, very significant.
Speaker #1: C, driving consolidation as we have continued to do, and where we believe opportunities across the spectrum are becoming available. D, a strong focus on industry parity, in particular, as regards the fourth operator to work towards a more sustainable market environment.
Speaker #1: Now, on enterprise, our focus for 2026 is entirely on scaling. Our 2026 outlook is based on prior order book and is relatively locked. Subject to, of course, risks.
Speaker #1: And the impetus is on winning order book where we intend to continue the explosive growth rates we have seen with large deals for the largest and most important customers.
Speaker #1: And underlying this, we are focused on building our delivery muscle and raising our revenue to cash flow conversion, both organically and selectively inorganically. On cyber, we intend to continue to invest as an apex CII for ourselves, for Singapore, and for our government and enterprise customers.
Speaker #1: Our investment hump is this year. And this is already yielding differentiation and benefits with cybersecurity as a core focus for all in our society.
Speaker #1: We also intend to continue and complete our Ensign divestitures to fortify our balance sheet. And last on cost, where we intend to stay very much on track with our targeted 70 million per annum of savings as we exit 26, and hopefully add to this.
Speaker #1: So overall, 2026 is a very dynamic year. For the telco sector in Singapore, for StarHub, and we intend to leverage our assets, our positioning, our balance sheet, and our position across our businesses to leverage this critical year to position for superior total shareholder returns in 2027 and beyond.
Speaker #1: Thank you very much.
Speaker #3: Thanks, Nikhil. We'll now open the floor to Q&A. So as usual, to join the question queue, please please click on the raise hand button.
Speaker #3: we'll call upon your name, and when it's your turn to post your questions, you can unmute yourself and share it. So first up, we have Sachin.
Speaker #1: Hi, Sachin.
Speaker #2: And Nikhil, firstly, I have, Hosseini also sitting on the same call, because you're in the same call end. So just to okay, quickly, now that we have 24% total EBITDA decline in the first half, and the guidance is 20 to 25%, what are the factors which, you know, which make it, you know, which make it safe or, you know, which make you believe that, you know, that's something you can maintain?
Speaker #2: Is there is it more cost savings? Is it some new revenue growth? You know, can you share some color what makes you confident to achieve the guidance, given the first half performance?
Speaker #2: So I think that's my key question here. Yeah.
Speaker #1: Okay. So let me take that, to begin with, and then I'll hand off to Jackie and, you know, Matt and kick you on the track if you'd like to add.
Speaker #1: So for it's a it's a few things. So first of all, yes, we are reiterating our guidance for the full year. and there are some cornerstones to this, the word that I like to use.
Speaker #1: Number one, when you look at our consumer business, as we talked about, yes, you know, there are downgrades across the sector and premium continues to shift to the value segment, but we are holding in key segments.
Speaker #1: But very important, one of the comments which both Matt and emphasize, and I emphasized, which is with our StarHub brand, we are upgrading our customers steadily to our 5G plus plans.
Speaker #1: And when we do so, we are realizing improved metrics, as I said, across, higher R2, lower churn, et cetera, et cetera. and we see the benefits of that, coming through, in terms of, you know, our monthly recurring revenues from that base.
Speaker #1: So that I would point you to as a as as a positive offset, again, against the declining trends that we see. And it's a positive offset that, frankly, is really important to us because, i-i-it really sets a foundation not just for this year, but really for next year and the foreseeable future.
Speaker #1: And it's driven off, you know, quality and differentiation rather than price, which is why we like it. So that's point number one. Point number two, again, you know, we, just to clarify, we have a one order book this year, but we also have one order book from priors.
Speaker #1: So we expect to see continue to see positive contributions in offsetting contributions for our enterprise business. our hope and intent is for that to gather pace as we exit, as we go into the back half of the year.
Speaker #1: so that's point number two. Point number three, you correctly point out, cost savings. now the cost savings, again, our plan are quite back-ended for 2027 and 2028, but yes, we are achieving cost savings this year.
Speaker #1: and then there are a number of other areas which are probably a little bit below the radar. in terms of, you know, kind of augmentation and other things, where we hope to realize, value and, and some buffer, in order to meet, and make our full year guidance.
Speaker #1: But I'll pause there. Leave it to Jackie to add any comments you would like, and then also to Matt and kick you on.
Speaker #2: Yeah. So I, I think something would be a combination of revenue growth and cost management, right? so but I, I think what we can really control is, the cost side.
Speaker #2: so we have identified a strategic cost management program. we have been executing, so I think we expect more to come in the second half.
Speaker #2: but on the top line, it's like, we are focusing on executing our strategies I think, Matt and Kiyo can elaborate more, but, it's enterprise size will be scaling the business, like, executing the projects, converting, like, order book into revenue.
Speaker #2: And on the consumer side, it's more on, like, just, like, focusing on value and, and the quality and improve on our output.
Speaker #3: Okay. Just a follow-up on that. So if, if you if you look at the consumer side, now that because of 5G standalone, is that the reason that consumers are moving to 5G?
Speaker #3: Is that the reason? And does it mean that, that actually R2 can be kind of stable from the levels here it is? Just to understand, this whole, sec.
Speaker #3: Right? Five, 5G, is it because of 5G standalone that we are a little bit thinking that R2's can benefit or stabilize?
Speaker #2: Yeah. Sachin, I might, chip in. hello. Nice to nice to talk. the StarHub customers are enjoying the standalone 700 megahertz, network. And so that then does provide a distinctly better quality.
Speaker #2: and we do expect that to contribute to the overall, dynamic around the 5G unlimited plus plans. what we're doing very actively is working into our customer base, to offer those better and better plans to our customers.
Speaker #2: and to have them move up through the, the pricing range. plus also with hubbing, we're having them add other services like broadband and entertainment, which also improves the total spend from those customers and with it, the, the total, margin yield.
Speaker #2: In addition to that, and, the eighth business, as mentioned, we're also offering 5G, but this is not, yes, the 5G with, 700 megahertz. and so as we go forward, we're expecting to see those customers continuing to adopt 5G.
Speaker #2: So that's less of a, you know, kind of the 5G plus story. It's much more of a just 4G to 5G story. but that's also showing good signs of, of R2 uplift.
Speaker #3: Sachin, if I could,
Speaker #1: maybe add two comments, add a comment, picking up on two points made, both by yourselves and Matt, first on 5GSA and second on 700 megahertz.
Speaker #1: because they really go to strategic differentiation. so first on 700 megahertz, you should note that, this, 700 megahertz rollout that we have, that we are quite advanced stages of propagating is a unilateral rollout.
Speaker #1: so it differentiates our network quality and our 5G network availability on standalone. vis-à-vis the smaller operators, both the smaller operators, which don't really have 700.
Speaker #1: The second point is on SA. And again, this is, strategic differentiation because what you may have noted, in, by reading in the media, is that, we shut down of NSA was mandatory by the June, June 30th, 2026 deadline.
Speaker #1: And, Singtel, ourselves, and M1, have completed this shutdown. and the fourth operator has been granted a temporary extension. as you know, when this temporary extension lapses, they will have to move to 5GSA.
Speaker #1: But they will have to deploy 5GSA on only two bands of 2.1 gigahertz spectrum. and by the way, those two bands of 2.1 gigahertz spectrum will not be redeployable for 4G.
Speaker #1: so again, we think, you know, both the 700 megahertz spectrum as well as the move to 5GSA, will differentiate, us, you know, certainly against the smaller operators by a significant degree.
Speaker #3: Got it. Got it. Okay. I think, this was Danny actually on my call. Yeah.
Speaker #4: Yeah. Hi. good morning. just two questions. First is on the, competition side. So just trying to understand that since the, you know, IMDA, press release on the, you know, smaller operators network breach, have we seen the competitive intensity, from their side, or their, you know, availability in the market, visibility in the market?
Speaker #4: And at the same time, are we seeing the intensity from the larger operator incumbent operator? Because if we see the revenue growth for this quarter, for, for the second quarter, there is a quite a bit of divergence between StarHub and Singtel's growth.
Speaker #4: So just trying to understand it. That's question number one. And the second question is on net debt to EBITDA. Which is around 2.4 times.
Speaker #4: I understand that StarHub is looking to acquire or do some small ticket M&A in the enterprise space. And then there is also talks of consolidation.
Speaker #4: So just trying to understand your leverage position, in, in light of all these M&A initiatives, although I, I do understand that there will be some cash flows coming from Ensign, but just trying to understand the overall balance sheet position.
Speaker #4: Thank you.
Speaker #1: Yeah. So maybe I can open up with some quick comments and then, you know, maybe pass it on to, to Matt and, and to Jacky on the net debt to EBITDA question.
Speaker #1: So I would say overall, in terms of the competitive intensity, as far as a fourth operator, we have not seen that abate. However, we should also say it's a little bit, as to the question of that competitive intensity, I think it's a little bit on the come.
Speaker #1: And there are a few things you should look for. You should look for whatever the consequences of the infractions that they have been found guilty of.
Speaker #1: it's unclear what those consequences are today. but when the consequences come through, you know, we'll all have to assess what that does. for their position to drive competition in the marketplace in the way that they have.
Speaker #1: the second thing is this very important point that I made on 5GSA. because in an in an NSA world, there's an ability to pool 4G and 5G spectrum.
Speaker #1: with 5GSA, you have to cleanly segregate your spectrum. and in that world, as I mentioned, they only have two bands of 2.1 gigahertz. which goes to both, you know, network quality as well as cost and capital.
Speaker #1: you know, to for network availability. So again, that's very much on the come. It's something to keep an eye out for. Singtel, I would leave to I would leave to Matt on the divergence.
Speaker #1: But I would like to say that, look, we're, we're, we're kind of all in this world where you know, we're sort of evaluating quarter on quarter of, differentials which are still negative.
Speaker #1: For everyone. And I think we really gotta get out of that world. you know, one quarter, we may do a bit better. They may do a bit worse.
Speaker #1: One quarter, they may do a bit better. We may do a bit worse. But it's still negative. and that's not really good for everyone.
Speaker #1: So hopefully, and hopefully, you know, not too far away, we can be we can be comparing, you know, to use.
Speaker #5: I was gonna say, I'll hand over to Matt to add more on those more very valuable points on that. But just covering off net debt to EBITDA, you know, I think the way to think about it is, the enterprise acquisitions that we're looking to make, are, are small and really don't have any material impact, on our balance sheet.
Speaker #5: And as I said, they're disproportionately positively beneficial because while they don't have any impacts on our balance sheet and our net debt to EBITDA, they really are quite helpful.
Speaker #5: you know, from a delivery standpoint, our ability to scale and our ability to improve our margins through insourcing. Now, as far as larger consolidations, we're pretty confident that we can keep them, from a structural standpoint, and from a sources and uses standpoint.
Speaker #5: You know, within the envelope of our leverage and our net debt to EBITDA, we can't really talk about that. you know, anymore at this point, other than to say, you know, clearly there's a lot of thought around structure, that goes behind beyond, and behind, you know, keeping to the right kind of capital structure envelope.
Speaker #5: But on the first piece, I'll ask Matt to add.
Speaker #2: Yeah. To be to be honest, I, I don't have much to add at this point. obviously, Husseini, the Singtel results only came out this morning, so we've not had a chance to, to look at those in, in detail.
Speaker #2: But, but we, we will. And of course, you know, we, we will always make sure that we're understanding those and, looking for opportunities where they exist.
Speaker #2: but I do think the, the theme at the moment is around the sustained, price competition, which impacts everybody. so, I'll leave it at that.
Speaker #2: Thanks, Simba.
Speaker #1: Simba, the question was also, have you seen?
Speaker #2: so, so Simba, a very clear on their positioning. They will always respond if there is, a-aggression in their, their direction, which is what they have done during the quarter.
Speaker #2: but look, we've seen a dynamic where the incumbent, after two or three, very weak, quarters of performance has responded. during that time, of course, with the, discontinuation of the transaction between Simba and M1, we've also seen the number three start to become much more active in the market.
Speaker #2: And then as is typically the case with then also seeing the number four start to respond as well. So that's essentially the dynamic.
Speaker #1: Yep.
Speaker #4: Okay.
Speaker #2: On the, yeah.
Speaker #4: That's up to EBITDA. So if you look at our 2.4 times leverage ratio right now, it's still significantly below, the company level. So we have sufficient headroom.
Speaker #4: That's number one. and also, if you look at our cash position, we have over 516 million of cash. we expect to monetize the remaining stake in Ensign.
Speaker #4: so and then also, we have a, like, a news facilities. So all these, like, we, we are in a very good position in terms of liquidity.
Speaker #3: un-understood. Thank you very much. Maybe just last one on the enterprise side. I see that there is a, you know, 49% and 52% increase in order book.
Speaker #3: So is, is it possible to give you an indication in terms of, you know, if that terminology, if it's here, book to bill ratio or something like that?
Speaker #3: in terms of order book, related to the current revenues. Thank you.
Speaker #2: All right. Sure.
Speaker #1: Okay. Thanks for the question. Right. So for our many services, as a business model, we are more focusing on recurring revenues. Right? Signing three to five years contract.
Speaker #1: And that is our core focus. And, we are very selective in those, one-off in-year revenue aside projects. We only do that because, that is a longevity with, the client that's going to manage services.
Speaker #1: So you can see that in this element of, the order book that we have, three to five years contract, right? So you can see that, there will be in-year conversion.
Speaker #1: For the first year. And we're not look-looking at this year. In fact, the in-year revenue that we have this year is actually what we did last year.
Speaker #1: Last year, if you recall, we have also have a strong year-on-year order book growth, also multi-year. a continuation of delivery. Right? So for example, some of the more public known projects, like the cell broadcast, the government tested it.
Speaker #1: So we are deploying now. And then, and we have to get it up by end of this year. So these are all high, value projects that we do to give us, our profitability.
Speaker #1: Leveraging on our core assets. And we are seeing that, as a continuation to the new order book that we have, this will be the future.
Speaker #1: So there will be three elements of it in our order book. First is our enterprise connectivity mobility. It's on the growth. We are growing our order book on that as well.
Speaker #1: There will deliver. Our in-year revenue. We have enough sources of, revenue, which is on the SI project, lab basis, business that we have. And then finally, is the platform lab managed services.
Speaker #1: Projects that we do. So three different kind of sources of, projects and revenue, each has different gross margin, and top line profile. So they all blend together for us to deliver our overall sustainable growth and our financial, commitment, right?
Speaker #1: So, so that we have a balance of portfolio to deliver, each, of our projects and.
Speaker #3: Yeah, sure. Thank you. Thank you very much.
Speaker #5: Thank you. So with that, I think we'll wrap up today's session. Thank you everyone for spending your morning with us. As usual, please, please feel free to reach out if you have any more questions or if you'd like to test your management.
Speaker #5: Have a great week ahead.
