Earnings Call: Q3 2023

Nov 7, 2023

Hi. Good evening, everybody. Thank you for joining us at our 3Q and 9M 2023 business performance update call. My name is Amelia. I take care of the hub's investor relations. This evening, as usual, we have with us our Chief Executive, Nikhil Eapen. Hi, everyone. Our CFO, Johan Buse, Chief of Consumer, and Tan Kit Yong, Head of Enterprise Business Group. We'll start off with opening remarks and an overview of our performance from Nikhil, followed by Dennis on financial, and then Johan and Kit on business highlights. We'll open the floor to Q&A thereafter. We go over to you, Nikhil. Well, thank you everyone. Good evening to all of you. Thank you for joining us for our 3 months and 9-month year-to-date results 2023. As we have always talked about, 2023 is an important year for us as part of our DARE+ plans implementation. With that, perhaps we can start with the financial highlights. Let's start with service revenue on the top right-hand side of the page. We experienced strong growth, as you can see, 8.9% for the third quarter and 8.2% for 9 months year-to-date, both year-on-year numbers. We grew across all business lines for 9 months year-to-date, and across most business lines for the third quarter. In fact, we had double-digit percentage growth for mobile entertainment and cyber, and decent growth for others. This was, as we'd like to point out, despite significant competition and market erosion, broadly. Number two on service EBITDA. Despite material DARE+ investment costs that we have been incurring through the year, we were able to grow service EBITDA 7% year-on-year for the third quarter and 2 months for the 9 months. On net profit, we grew net profit very strongly by 37% for the third quarter year-on-year and almost 30% for the 9 months year-to-date year-on-year. This strong growth was a function of few things. It was obviously in tandem with growth on top line and EBITDA, but it also reflects something that we'd like to talk about more and more, which is CapEx to OpEx substitution, which we are driving across the board and in line with our more asset light and capital efficient strategy. Not on this page, and to steal my CFO's thunder a little bit, our free cash flow is also strong and mounting at about SGD 131 million for 9 months 2023. Our leverage at this point is very low at about 1.43 times, giving us a big war chest for our DARE+ program, for acquisitions, and of course, for shareholder return. We expect to continue reducing our leverage. Overall, across these numbers, 2 important points. First of all, CapEx to OpEx is something that I mentioned. When you look at Antina, which is the way we fund our 5G rollout in joint venture with a number three operator, as well as our IT and network, which we are moving more from, you know, sort of legacy, to cloud-based models. We are shifting from CapEx to cloud OpEx. This is a fundamental business to have model evolution, as I said, more asset light. And what you will receive, so far to date as well as over time, is our net income and free cash flow become more pertinent, than EBITDA, for instance, which doesn't necessarily have that ROI focus. You will see our net income as a percentage of EBITDA, and free cash flow as a percentage of EBITDA increasing, and this is something that Dennis will elaborate on and we'll focus on today. On DARE+, which is the second important point that I'd like to make. As you know, we invested, between cash and accruals, about 36% of the SGD 310 million in 2023. We continue to spend materially on DARE+ this year, and we will be spending next year. As Dennis has mentioned in prior calls, we expect to reduce that total bill for DARE+ from that SGD 310 million, to something lower, which again, we'll update on in due course. Once that spend is done, once, you know, the spend will tail off. We will also start harnessing and driving DARE+ efficiencies, which haven't really happened yet. We expect and are very focused on driving continued profitability growth beyond this point, again, that's something that we'll elaborate on in our Investor Day. With that, next page. Segmented revenue. Year-on-year, we grew across all segments for nine months year to date. On mobile, we grew service revenue substantially by 11% year-on-year for the nine months and 7% for the third quarter. Our focus has been on monetizing and increasing ARPU rather than fighting the price fight in the market at the low end segment. We captured roaming upside, but we also held or increased our base ARPU. Again, I'd like to say that this is in stark contrast to the market, which has been eroding. I think many of you have seen the year-over-year reduction in consumer revenue with the number three operator, which includes broadband, by the way. We estimate our revenue market share to be quite substantial of the number three operator and approaching almost 500 basis points. On broadband, we have market leadership. We've grown 4% year-over-year. On 3Q, we faced a small decline. We have consciously withdrawn premiums and promotions. Hence, we actually have a little bit of profitability improvement on the segment. We're also strongly growing and are very focused on driving increased penetration of high-speed plans, which we define as two gigabit and 10 gigabit XGS-PON, where we were actually the first in the market. On entertainment, we've seen strong growth year on year, as well as for the quarter, year on year. This was of course due to a few things. We will call our Premier League, but also pull through from Premier League into high value packages. When you look at, you know, our sports lineup, we have F1, we have Rugby World Cup, we have the ICC World Cup. We have extremely and most comprehensive offerings for sport, but also for general entertainment. This is reflected in our significant lead in revenue market share in the entertainment segment. On the enterprise side, we saw sustained year-on-year growth, mainly driven by 22% growth year-on-year for cyber for the nine months and actually 45% in Q3. We've always talked about the fact that our cyber business and our joint venture Ensign, you know, is growing strongly with backended growth, you know, in third quarter and fourth quarter. We continue to see strong pipeline and strong growth for the cybersecurity segment. Regional ICT is down. With network solutions, we continue to see strong market competition for the connectivity businesses, which are a little bit more, you know, comparable across competitors. We are growing our managed services quite aggressively. We are also reorienting our enterprise business, you know, really towards selling new platforms around multi-cloud networks, Green Tech Managed Services, et cetera, et cetera. Really, you know, driving that thesis around converging cloud, cybersecurity and connectivity on single platform. With that, you know, just updating versus our guidance. We had service revenue guidance 3%-5% for the year. For 9 months, we're ahead of that at about 8%. On service EBITDA margin, year to date we're in line. On CapEx, we are outperforming and under, although we do expect some, you know, something we catch up, regarding the team CFO will elaborate on and put out to have. With that, I'll hand over to Dennis for a more detailed financial overview. Thank you, Nikhil, good evening everyone, and thank as usual for joining us. Some key call outs on slide 7. In terms of operating expenses, you would see a year-over-year increase and that primarily representing the transformation expenses that we have incurred and continue to incur in respect of our DARE+ strategy. That also is the same trend and explanation insofar as our 9-month number is concerned. EBITDA for the quarter was at SGD 114 and for 9 months sitting at SGD 344. You'll see that our net profit number is strong, we closed quarter about SGD 37 million, representing about 37% year-over-year increase. For the 9 months, we have a 29% increase in our net profit number. You'll see that the net profit number has grown significantly faster than our EBITDA number, and that goes to the point that Nikhil had mentioned regarding our CapEx, OpEx shift and the fact that our depreciation and amortization bucket has reduced. We do have a year-on-year net reduction in our net interest expense. Net profit after tax of SGD 37 million represents SGD 0.023 on the EPS basis. For the 9 months, we have EPS of about SGD 0.067. Free cash flow of SGD 131 for the 3 months, for the quarter as well as for the 9 months, sitting at SGD 131 or SGD 0.077 per share. Our leverage, as Nikhil mentioned, is 1.43 times. With that, I will hand over to Johan to talk about consumer. Thank you very much, Dennis, and good evening, everyone. Nikhil Eapen gave already most of the information, so I'll pick it up here from the bottom of the page. Mobile did really well. We had a strong quarter, year-on-year for the quarter, up 7% to SGD 153, and year to date, 10% close to 11%. ARPU increased marginally year-on-year. That's due to higher roaming, fast and voice subscription revenue, and as you could expect, lower, offset by lower overall usage revenue. Postpaid base grew marginally, mainly due to giga!, and the churn rate remained pretty stable at 1%. Prepaid is a different thing altogether. Prepaid is at SGD 7 flat. We ended a promotion which led to a decrease of the base to 574. In this market, keeping prepaid ARPU stable is quite a good achievement. Broadband, on the next page. Broadband stands at SGD 40, SGD 34 ARPU. Jointly between us, MyRepublic and StarHub increased to 579,000 subs, and the churn rate remains very stable at 0.6, and the rest already covered by Nikhil. We do see broadband still improving in terms of revenue year-on-year. The offset in the quarter revenue is due to premiums, as mentioned by Nikhil, but not impacting service revenues. Entertainment, the last one. Entertainment had a real good quarter, again, as highlighted by Nikhil, mainly due to PL. We really see a very good pull through in terms of the content, and we closed the quarter on SGD 45 ARPU. Sub base you do see a decline, but that's due to the fact that at the beginning of the year we moved to active base reporting and we ended one specific promotion leading to a marginal decrease. Churn rate, therefore, is flat at 1%. Segment revenue, as you can see, both quarter as well year to date showed really good improvement. That's from my side. Handing over to Peter Jung. Right. For the enterprise business itself, look at Q3 2022, and Q3 2023, we're having a 14% growth. For nine months we have 6.5% growth. Look at the revenue mix itself, regional ICT, data internet, cybersecurity, managed services. These are the banks, so largely the same. Now, when we break it down, for network solution itself you can see that there's a higher year-on-year growth for the nine months of the revenue mainly due to managed services, they're also offset by decline in data internet and voice services. The lower year-on-year Q3 revenue is due to lower contribution from data, internet, and voice services revenue. Managed services is growing strong for us. For cybersecurity services, you can see that both the higher revenue for year-on-year, and due to recognition of the project has been completed. Please note that the segment recorded operating loss of SGD 5.1 million in Q3 compared to operating profit of SGD 6 million, despite higher service margin. It is mainly due to investment into talent and to continue to grow the business. When it comes to regional ICT services, it's almost flat, right, for year-over-year, for Q3, versus 2022 versus 2023. If you look at the for the nine months 2022, 2023, that's 6.8%, right? This is mainly due to the lower hardware sales that we are seeing for Q3 itself. Right. Move to the next slide. Ensign. Ensign? Yeah. On Ensign, you know, we have announced in our press release, and we would like to further announce today that we have actually extended our assignment, assigned rights, which was due to expire, you know, this year, for another two years. This is reflective of our focus on cybersecurity, and cybersecurity is core to our DARE+ strategy, right? It's actually reflective of our focus on cybersecurity as part of overall platform with cloud and cloud connectivity and multi-secure, multi-cloud networking, as well as market city development. It's reflective of the fact that we have a strong alignment with our partners in that space, and we're focused on driving the growth of Ensign together. With that, I think we can move to Q&A, Amelia? Yes, we can. Yeah. I noticed Sachin put his hand up for questions. Yeah ... like about two minutes after we started, Sachin. Yes. Sachin, please unmute yourself. Oh, yeah. Yeah, congrats on a good set of results. Thank you. My question, I mean, I had a natural question because, I didn't see any update. That's okay. We love your enthusiasm and your passion and support. Yeah. I saw that I didn't see any update on the transformation cost during this quarter and during the nine months. Yeah The CapEx mix. If you can update that. Actually I can ask my follow-up question on that, yeah. I'll leave it to Dennis to decide what he wants to update on now and what we may patiently ask you to wait for I think two to three more weeks. Okay. Yeah. Sachin, our intent was to actually provide an update on 28th November, which is our Investor Day, which we are really excited about. This was not necessarily intentionally left out of this, we felt that the update would be more relevant at that Investor Day. Yeah suffice to say that the CapEx/OpEx mix that we previously provided a guidance to, in the half-year results, still remains. In terms of where we think we're gonna end up for the year in terms of total transformation expenses that we provided update, it would be slightly lower than what we thought it would be. I'll just leave it as that for now, and we'll provide more details on the Investor Day. Yeah. Actually one more question, which is related is because second half was supposed to have more transformation cost than first half. Looking at your guidance, it seems you're expecting the margins to be stable, which means we are not expecting a ramp up in fourth quarter transformation cost. Is that a right way of looking at things? If bulk has to be incurred in fourth quarter, then margins should have come down, but you are not updating your guidance on margins. Is that right at all? Yes. We actually updated our guidance on margins when we went out with our half-year results in August, right? That guidance that we moved up, in fact actually at the point we had started the year with a 20% guidance, and we then said that it would be in about 22% when we released our half-year results. We are staying with that guidance, or that updated guidance that we gave for the half-year results, and that guidance had already factored in the transformation expenses that we actually expect to incur in 2023, both in the third and fourth quarters. Sachin, we are spending materially in the fourth quarter, we'll update in terms of the timing, phasing, as well as Dennis said on the total quantum, which is no longer SGD 310 million. It is lower. We'll put that together and we'll chat about it on Investor Day. Yeah. Okay, and last question. Now mobile is in the green category, growing. Are you seeing any risks to mobile growth in the near to medium term, or you think we will probably see some growth going forward in the mobile space irrespective of how many number of players? Now we have four players in Singapore. Just your view on that. Thank you. Johan, question for you. Oh, there's a question for me. Thank you very much. It's hard to predict, to be honest. We have been doing very well on mobile this year. On the back of roaming. Roaming still hasn't fully recovered. There is potentially some upside still on roaming. Having said that, there is obviously some headwind in the market with some of the operator players coming in at relatively low price points. We have a strategy in place, so I'm not in a position to make firm forward-looking statements, obviously. I do think we can say today that we have more things within our control that we can play if needed, than those which are outside of our control. To be very clear, Sachin, we don't like the way the market is. No ... is headed. We don't like the way, you know, the, the, the sort of number three and number four operators and the MVNO, we don't like the trending there. We've tried to stay away from it. We've focused on revenue market share. We've focused on monetization. Our tactical and strategic plans are built on the premise that market competition remains- Yep extreme. Exactly. Sachin, we hope that answers your question. Yes, very much. Thank you. Thank you. Thank you. Next in the line, Melissa. Hi, Melissa. Hi, this is Sumesh Agarwal. Oh, okay. Uh- Hi, Sumesh. Hi. Hi. I just started covering the sector. At UBS. Welcome. Thank you. Dennis, I wanted to start with this. You mentioned that there's a mismatch between EBITDA growth and profit growth, right? Most of it comes because you've moved DARE+ CapEx to OpEx. Accordingly, the depreciation cost and interest costs have come down. Could you give us a sense of by how much depreciation cost year on year and interest cost year on year have come down? Thank you. Okay. Hi, Suresh. If you look at the absolute difference or the growth in numbers. EBITDA for the quarter has grown about SGD 4 million. If you look at the net profit attributable to shareholders, it's grown by SGD 10. You kind of look at that, you know, you can kind of extrapolate the depreciation and net interest. The depreciation costs have come down for the quarter by about SGD 4 million, and the net interest expense has come down by about SGD 2. That is kind of the breakdown between the two numbers. I do want to correct one point. It is not the DARE+ transformation that has moved from CapEx to OpEx, because DARE+ transformation costs are incurred in both CapEx and OpEx. However, if you look at our 5G network, the radio component is in the form of OpEx, because that is incurred in wholesale costs, through our joint venture of our competitor. In terms of some of our cloud loads, in our IT stacks, that has also been, you know, in the form of OpEx. Those, by the way, those two components used to be CapEx, right? When we had our 4G network, we had the radio network incurred as in the form of CapEx, and therefore the depreciation on that, it goes through the books. As well as in our IT stacks, where it's largely on-prem, those will be CapEx as well. That's the two primary shifts in the CapEx or OpEx model that we wanna call out. Just to doubly and triply clarify, it is not DARE+ CapEx that is moving to OpEx, as Dennis said. The impact of DARE+ is to move BAU CapEx or avoid BAU CapEx and instead reflect it as OpEx. Part of that is Antina. You know, part of that is IT moving to the cloud. As we've talked about in the past, what we're doing, which is very unique, globally, in fact, is cloudifying our network as well. That has an impact in moving CapEx to OpEx in fairly material terms. Sure. Thank you for that. Staying on that, in the fourth quarter, will this trend continue given that you have recently adopted this? Mm-hmm. From a year-on-year perspective, in the fourth quarter versus the fourth quarter of last year, will this trend continue in going into net profit? The answer to that, Suresh, is yes. Great We actually started this journey last year in 2022. This is not a journey that we just commenced, right? If you kind of look at this and our results prior to 2022, which is 2021, you would see that, you know, the gap between our EBITDA and net profit is a lot wider than what you saw in 2022 and what you're now seeing in 2023. This is not a journey that we just started. I would caution, it's not, these aren't, this isn't really about quarterly trends because as we shift CapEx to OpEx, it has, you know, kind of long-term tail effect. Mm-hmm. We, as that accumulates, the impact get larger and larger. Understood. It's an accumulative impact. Yeah. Yeah. Thank you. My last question on DARE+, and the ensuing CapEx, right? The guidance is for 11%-12% for the year. You're trending 7%. Does that imply higher investments in the fourth quarter especially? Yes, for sure. We've got a couple of initiatives that we are expecting to incur commitments with respect to those initiatives in Q4. Okay. Thank you very much. Yeah, we're reiterating our CapEx guidance, so not revising it. Yeah. Thank you. Thank you very much. Thank you. Next up we have Arthur. Hi, Arthur. Hello. Hi, good evening. Hi, thanks for the opportunity. Just 2 questions, please. Firstly, can you elaborate what's happening on the broadband side? What are you seeing in the segment given the pressure? What are the various operators doing to drive down the revenues? 2nd question is on the enterprise side. It's up 15% Q&Q, quite strong. I'm just wondering, are there any lumpy revenue bookings or is this a benchmark level that we should look at going forward given that there are newfound capabilities? Okay. Thank you. Thanks for the question, Arthur. On broadband, as I mentioned earlier, it's important to split out what we call premium revenue from service revenue. Over the last two years the market in certain situations moved to selling premiums in combination with broadband, and they come at a cost. That's booked technically as a form of revenue. If you for ourselves strip out that revenue, the service revenue year-on-year is actually flat, literally flat. Within that I don't mind saying that we do see continuous uptake of customers taking higher speed broadband packages. Now, what is happening in the market is that some of the players, and particularly the smaller ones, are becoming increasingly price aggressive, probably preempting, I would say personally, maybe unnecessary, an arrival of SIMBA in the broadband space. That's basically what is going on. We have focused ourselves more on the higher speed plans, which will, we believe help, continue to grow our revenues in that space and obviously what works very well as, at the moment for us is the combination between broadband and entertainment as complimentary service. That hopefully is answering your question in terms of what is happening in the market. Thanks, man. Thank you. Right. For enterprise itself you see the 15%. It is typically the star for the quarter is actually our cybersecurity services, right? This is project services, so you will have, is it lumpy in different quarters. This quarter we happen to harvest the projects that is finished completion. I would say that this is the quarter for cybersecurity due to the product services that were completed. If you look at network solutions and regional ICT, right, they are slight decline, right? Like not 3.2% decline, we can contribute that is cybersecurity. Yeah, I would say it's both. Yes it's lumpy but with cybersecurity in particular, yes, there is an ongoing and increasing trend. Understood. Thank you very much. Thanks, Arthur. Next up we have Paul. Thanks for the presentation. Just one question on DARE+. I know you share more details in Investor Day, dare I ask. What happens once the DARE+ initiative is over? Does it mean that these costs will not recur? There'll be a gap down. Just trying to understand again. That's my first question. The second is just on the cybersecurity. You mentioned strong pipeline and also order book. What has been some of the initiatives done? Is it like you have new product launch, new geographies? Just some clarity would be helpful. Thanks again. Maybe I'll start on DARE+ and Dennis can add. What happens when DARE+ is done is we stop spending money on DARE+. The other thing that happens is we have the ability to harness efficiencies. For instance we can decommission existing legacy system, therefore saving money and through all the automation initiatives that we're doing, we can reduce costs across the business. The third thing that can happen is of course to drive revenue through a new platform. Now it's not clear. You know, those are sort of phased initiative by initiative. And that's something as we said we'll sort of continue to update on. Dennis, anything to add? Yeah. Paul, I would just like to update that, you know, insofar as how we define DARE+ transformation costs, there are these investments that we are incurring to actually, for example, transform our IT stacks, right? As we install and implement new IT stacks these are considered as transformation costs. When these new stacks are in place and in flight, and being implemented these will become business as usual costs. When you have new IT platforms there will be license costs that you have to incur on these new platforms. Those, when they become the stable and able take the stakes of our IT platforms, those become part of our cost structure going forward. That therefore then, you know, there's a part of it that will remain and recur. It's not, as Nikhil said, it's not a cliff. It just doesn't mean that once you're done with it the entire bucket just disappears. It just simply means that the part of it still stays but the cost in respect of some of the old and legacy systems drop off. Effectively that's how you should be looking at it. Then to your question on cybersecurity there are shifts underway within Ensign. Ensign is moving really to a model where it brings together quite a lot of state-of-the-art product and capabilities. With interesting overlays on top to drive things like visibility, end-to-end visibility, automation, et cetera, et cetera. There are also a lot of new platforms that apply data analytics and artificial intelligence on top of data lakes to really drive threat detection as well as incident response in ways that are very, very agile and highly automated. Some of these things we can update on, some of these things we cannot. You know, the customer base that Ensign has is quite unique, and quite demanding, in terms of the threats that they face, and what they need Ensign to do. We will continue to update in due course, you know, starting with, you know, the investigative impact. Thanks. Just a quick follow-up. In terms of the drop-off in the legacy cost, is it occurring as the years progress? In FY 2024, it will. You'll see that big drop-off or it's been gradually happening, you know, as you've been kind of incurring this new BAU cost or this new IT system? Yeah. Thanks. It would not be a cliff. It is a gradual drop-off. You know, our IT architecture as we are proud of it, is not necessarily, you know, a simple one-to-one replacement, right, in some cases. If as the old systems are being decommissioned, there will always be an overlapping period, right, where you actually test the new systems that are being implemented while you decommission the old one. There is a period where both are running parallel, and you will incur both costs at the same time. As and when the new system is then stable, you drop off the old system. It is a gradual drop-off because it's not a one-time replacement of everything, right? It is stack after stack and it is, it's a phased approach. Okay. Got it. Thanks so much. Everything is phased. The DARE+, we stop spending on DARE+, and that tails off. There's so many different streams of DARE+ with timelines associated with each of those streams that, again, it's not a cliff. As Dennis says with the decommissioning, you know, again, it's going to be phased because it's an exercise where we look at our systems, you know, we decommission them when we can, and different systems at different times. It's the same with the automation initiative. Yeah. Yeah, I just wanted to clarify that, you know, once by 2024, you know, the DARE+ OpEx at least disappears. You're not gonna see that big gap down in OpEx like you mentioned because some of these are BAU costs. Yeah. Thanks. Yeah, I just wanted to clarify that. Yeah. Thank you. Next up, Darshan. Darshan? Hi. It's Neil. Oh, hi Neil. I keep getting logged on as. It's okay. I keep getting logged on as Darshan for the last three quarters. Thanks, team, and congratulations on a decent set of numbers. What I want a little bit of clarity on is CapEx. That's just my thinking. I don't think spectrum rights, which is part of your CapEx guidance, is really CapEx. It's OpEx, right? If you strip that out, how much of the balance is maintenance, network CapEx, for the business lines, and how much is pending 5G related? That would be great. You can give me just a broad guideline. Dennis? Neil, just to clarify on the first point that you made, spectrum rights are considered CapEx for our purpose because they are classified as into our balance sheet as property, plant and equipment, and, or intangibles, and they are amortized accordingly, right? Insofar as the new spectrum bands are concerned, where they are being assigned to our joint venture, Antina, for purposes of 5G, they are still capitalized in our books and then amortized accordingly. I just want to clarify on that point, and therefore our CapEx guidance do include spectrum rights. However, for purposes of 2023, the 5G spectrums, which were previously awarded, the 3500 band, which was awarded, I think in 2018, and the 2100 band, which was awarded in 2100, those spectrum bands would have been considered CapEx commitments in those respective years. Since there are no new spectrum bands that we have bidded for in 2023, embedded in our CapEx guidance for this current financial year, it does not include spectrum rights. To your other question on the CapEx, we have guided to 11%-13%. We have consistently said that, on a steady state, our business as usual CapEx would be in the region of 5%-7%. You can therefore infer that on our growth initiatives, which includes 5G and some of our various DARE+ initiatives, it would be in the region of 6%. Dennis, would I then infer that the balance 6 odd %, between what you've spent now- versus the 11% to 13% guidance is roughly what you would be spending on the balance of 5G network rollout? Yeah how much should I think about? It's not just 5G because we have gone out as you know, the 5G rollout is still in flight, so there will be ongoing investments in 5G, which is the components that do not sit in StarHub obviously, excluding the radio which sits in our joint venture. The other component of the 5G network sits within StarHub and that's embedded in that number. We've also gone out and said that there's a whole bunch of DARE+ initiatives which include our IT transformation, so there's CapEx in respect to that. There's also the cloudification of our network, and that CapEx is also assumed in there. There's a whole bunch of initiatives which we've already advised the market on, and those initiatives are being implemented. Thanks, Dennis. Are you at liberty to give a ballpark whether there's another SGD 300 million or SGD 400 million whereabouts, you know, what the number is of how much you need to spend on the rest of the 5G build-out or not? Um- I understand. We are not at liberty to, you know, disclose that number because, you know, that kind of goes into our strategy, in terms of what, you know, and how we intend to architect our network. I'm not in a position to provide that number, and also I just want to note that there are currently two 5G bands, which is the 3500 and 2100. Yeah. The rollout is for those two bands. Insofar as other spectrum bands are designated 5G in the future, there will potentially be other investments for those new bands as well. It is not a end, there's no end in. For example, when we complete the current rollout, there may be future rollouts as well as it morphs into 5G, you know, from the 4G as well. It's an ongoing journey effectively. Thanks, Dennis. Thanks, team. Thank you. Thank you. Thank you. Thank you. Next up we have Kenneth. Hi, management. Just two questions from my side. The first is on the DARE+ costs. Understand that you can't share the amount of costs incurred in third quarter, but could you comment whether that was a quarter-on-quarter increase versus second quarter? My second question is on regional ICT. There was deeper operating losses in the third quarter. What was driving this? Was it unfavorable service mix or something else altogether? Thank you. Dennis, would you like to start? On transformation expenses, Q on Q, it was a slight increase in Q3 versus Q2. It's not a significant increase insofar as the OpEx fund was concerned. I hope that addresses your question on the transformation expense. For the full year, we do expect to incur a relatively higher capital investments as well as OpEx investments for the quarter. That means the last quarter of the year. As we build up the remaining portion of what we intend to invest for the DARE+ initiatives as we close off the year. Sorry, if I may just pause there to see if that answers your question. Yeah, that's great. Okay. Thank you. On the regional ICT, you know, the margins, yes, there is a margin mix typically depending on the nature of the project. Insofar as, you know, there are more service component embedded inside in the ICT solutions or the projects are being delivered, then naturally the margins tend to be relatively higher. It depends very much on the nature of the projects that are being delivered within the quarter. That effectively just explains, you know, the positive or negative shift in the margins from quarter to quarter. The way to look at it really is, you know, in looking at the full year number because that will kind of show up the blended projects or the, you know, the total number of projects as well as the mix of projects that we would have delivered during the course of the year. Dennis, I hope that answered your question? Thank you. Thank you. Next we have Arthur. Sorry, just a follow-up question to clarify the guidance. Your official guidance in margin is at 22% for the year, nine months already at 22. 3Q was at 20. That implies that you're basically expecting 4Q margins to be better versus the third quarter margins. You've also implied that DARE+ costs will ramp up into the fourth quarter. Does this mean that the bookings for DARE+ into the fourth quarter will mainly be CapEx related, not OpEx? Is that how I should look at this? Arthur, you know, no. That answers no. No, because, you know, effectively we have closed the 3 quarters at a 21.8% service margin. Our guidance for the full year at approximately 22% implies that that would be the margin that we expect to deliver, notwithstanding the relatively higher OpEx that we expect to record in the 4th quarter versus the previous quarters. We also have visibility on a number of other initiatives that we're rolling out and as well as our business and the various subsidiaries that, you know, that we have within our portfolio. The mix of it effectively, you know, we do see some improvements, you know, that we will recognize in the fourth quarter, that will serve to offset some of these relatively higher transformation expenses. Understood. Okay, thank you. Thank you. We still have some time to take any more questions that you might have. While we wait for the next question, you know, it's a perfect opportunity for me to plug Investor Day. Mm-hmm eighteenth of November. It's a perfect chance for you to please go with management, both StarHub and Ensign, and also get to experience for yourself. Oh, okay, great. We have a question from Ziwei. Hi Management, and congrats on a strong set of numbers. Thank you. Just want to clarify one thing. On your fourth quarter, you mentioned that you'll be decommissioning systems along the way. Just to be absolutely sure, we won't see any sort of like kitchen sinking of legacy equipment or whatsoever, right? Danny? I'll just bring you back to fourth quarter of 2022, when we actually took some impairment charges for certain legacy infrastructure that we expect to decommission or to sunset. At that point, you know, those have already been considered. That's a long way of answering your question today. No, we do not expect to have a one-time, you know, kitchen sink charge in respect of decommissioning. Effectively, what we will do, however, is, you know, when we decommission, the cost of running those systems will follow, but there would not be an impairment charge in respect of those systems that are being sunset. We have taken those into consideration in the fourth quarter of 2022. Ziwei, I hope that answers your question. Very clear. Thank you. Thank you. There's one question in the chat from- Yeah One question in the chat. Devices. Yeah. With regards to the lower hardware sales we enterprise is a sign of less willingness from business spend due to high interest rate environment. Nikhil, would you like to take this? Actually, Kiat Yong, why don't you do that? Yeah. Okay. We used to have a more regular hardware sales. It's just like it's the cycle of the business. In this quarter, there are certain deals got delayed right into the next quarter, and some are beyond. That's why you see a higher hardware sales. As a whole, the hardware sales, you can say that, based on the macroeconomics, ICT spend has been subdued, right? Because of many economic challenges. We're seeing as a tightening trend as we speak. In this case here, mainly it's due to some of the deals that we have. The purchase of the equipment has been deferred. That's why there's a higher hardware sales here. Thanks. Do we have any more questions from the floor? We'll give it one more minute. Last call. All right. I think we can end the call early this quarter. Thank you everybody for spending your Wednesday evening with us. As always, you know, if you have a follow-up question, you know how to reach me. We hope to catch up with you on November 28th for 2023. Do have a great evening and good night. All right. Thanks all. Thank you. Thank you very much. Thank you. Bye. Bye-bye.