StarHub eyes full Ensign exit as consumer competition squeezes earnings

Nurdianah Md Nur

Aug 13

StarHub's 1HFY2026 profit was lifted by an Ensign gain, while rising enterprise contract wins offer a longer-term counterweight to pressure in consumer services.StarHub's next disposal of its Ensign ...

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That transaction ended an arrangement that had given the telco control of the cybersecurity company, leaving it with a minority stake and reclassifying Ensign as an associate.\nEapen puts the value of StarHub's remaining Ensign stake at more than $300 million, based on the gain from the partial divestment. Since Ensign's valuation is \"not encapsulated within [StarHub's] overall public market valuation, a disposal would offer \"the opportunity to fortify [its] balance sheet\" and \"sharpen [its] focus around the regional enterprise and managed services business\", he says. He also distinguishes Ensign, which provides \"pure-play cybersecurity services\", from StarHub, where cybersecurity is embedded in its digital-infrastructure platform.\nThe Ensign transaction lifted StarHub's 1HFY2026 profit, masking continued pressure on its core operations.\nNet profit attributable to shareholders rose to $258.1 million for the six months ended June 30, from $51.9 million a year earlier. The result included a $245.7 million one-off gain from the termination of the Ensign arrangement and the remeasurement of StarHub's residual stake.\nUnderlying net profit attributable to shareholders was $12.4 million. Excluding Ensign, total revenue fell 8% y-o-y to $874.3 million, and service revenue declined 6.7% to $744.4 million. Ebitda dropped 23.8% to $158.6 million, narrowing service ebitda margin to 20% from 25.1%.\nEnterprise contracts rise, but revenue takes time\nAlthough StarHub's enterprise order book grew strongly in 1HFY2026, revenue declined as project delivery and recognition lagged new contract wins.\nWon order book in regional enterprise rose about 49% y-o-y in 1HFY2026, while managed services order book increased about 52%. Regional enterprise revenue fell 1.8% to $290.8 million, including a 2.8% decline in managed-services revenue to $154.3 million. Managed-services revenue improved from the first quarter as project delivery picked up.\nEnterprise connectivity revenue rose 1% to $74.8 million, helped by enterprise broadband. Carrier and voice revenue fell 2.6% to $61.7 million.\nTan Kit Yong, StarHub's chief of Regional Enterprise Business, shares that new enterprise contracts increasingly pair infrastructure with managed services platforms and tools operated by StarHub. \"Our contracts last three to five years,\" he says, describing them as a \"flywheel\" that builds recurring revenue as the company adds services when customers renew. Current-year managed-services revenue is largely drawn from contracts secured earlier.\nHe adds that StarHub is targeting enterprise customers in Singapore and Malaysia, including contracts for infrastructure, managed services, data and AI work. It is also pursuing \"small-scale selective M&A\" in enterprise, which Eapen says could add \"key manpower\" and \"key skill sets\" to serve large customers \"faster, better, and actually with improved margin\".\nHowever, the company cautions that higher infrastructure costs, tighter customer budgets, longer procurement cycles and AI-led insourcing could slow the conversion of its order book into revenue in the near term.\nConsumer pressure persists\nConsumer revenue remained under pressure, with mobile declining 10.5% y-o-y for 1HFY2026, broadband down 8.7% and entertainment falling 8.2%.\nMatt Williams, StarHub's CEO-designate and chief of its Consumer Business Group, cites a \"resurgence of price competition\" in the second quarter, as operators offered discounts, free service months and additional benefits.\nMobile average revenue per user (ARPU) was $20 in 2QFY2026, down from $21 in the preceding quarter. StarHub had 2.219 million mobile subscribers at the end of June, compared with 2.137 million a year earlier. Average monthly churn was 1.4%.\nBroadband ARPU was steady from the previous quarter at $33, even though it was below $36 a year earlier. Subscribers fell to 567,000 from 573,000.\nStarHub is responding through the StarHub, giga!, Eight and MyRepublic brands, while moving customers to 5G Unlimited+ plans. \"We're starting to see real traction around this plan now,\" Williams says, citing lower churn and fewer calls to customer-service centres.\nThe telco is also moving all MyRepublic 4G subscribers onto the StarHub network, adding to MyRepublic 5G customers already using its platform. Eapen says the arrangement expands the group's multi-brand strategy and, in a market he expects to consolidate further, brings \"many tens of thousands\" of subscribers onto the network.\nSavings and dividend\nStarHub maintains its FY2026 ebitda guidance of 75% to 80% of FY2025 ebitda. It declares an interim dividend of 3 cents a share and reiterates its full-year outlook of the higher of 6 cents a share or the payout under its dividend policy.\nCash and bank balances stood at $515.7 million at the end of June. Free cash flow was $40.6 million, compared with negative free cash flow of $171.8 million a year earlier. Net debt to trailing 12-month ebitda rose to 2.39 times from 2 times at the end of 2025.\nStarHub is targeting $70 million in annualised run-rate savings by the end of 2028, from legacy-system decommissioning, network optimisation, systems re-architecture and business simplification. About 10% of the target had been achieved by June. StarHub expects savings to build progressively through FY2027 and FY2028.\nAs at 11.50 am, shares in StarHub are trading 3 cents higher, or 2.78% up, at $1.11.","kind":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":false,"editions":null,"column":"","sentiment":"-1","news_tag":"","news_rank":0,"isVideo":false,"video":null,"symbols":[],"gpt_button":0,"need_auth":false,"need_login_tip":false,"code":"91000000","status":"200"}}}