Earnings Call: Q3 2021

Oct 10, 2021

Hi. Good evening, everybody. My name is Amelia Nettike of StarHub's Investor Relations. Thank you for joining us this evening for StarHub's 3Q 9 months 2021 business update performance call. We've also announced this evening our acquisition of HKBN's ICT arm, JOS Singapore and JOS Malaysia, which we will also discuss on this call. This evening, we have with us our Chief Executive, Nikhil Even our CFO, Dennis Chia Charlie Chan, Chief of Enterprise and Yohan Busse, Chief of Consumer. We'll start off with opening remarks and an overview of our performance by Nikhil, followed by Dennis on financials and then Yohan and Charlie on business highlights. We'll then discuss the key highlights of the JOS acquisition before we open the floor to questions. Nikhil, over to you, please. Yes. Thank you everyone for joining us this evening to hear about our Q3 numbers and also about our acquisition of JOS Malaysia and Singapore. We look forward to spending time with you. So, first of all, I'd love to go through our financial highlights. So, going through and taking through revenue, service revenue, EBITDA, net profit and beyond, starting with total revenue. Our total revenue for Q3 was at 517,000,000 which grew 5.6% year on year in broad terms and about 6% quarter on quarter. Almost all lines of business were growing sequentially for the quarter. Now revenue for equipment sales increased 19.5% quarter on quarter due to customers upgrading to 5 gs handset models, the iPhone 13 launch and other events. But most important, service revenue increased 7.6% year on year and steadily quarter on quarter for the last two quarters with Ensign, Stratec, broadband and mobile growing, Entertainment and Network Solutions are flattish over the last quarters. Now looking at service EBITDA and margins, our Q3 service EBITDA was $126,000,000 up 1% year on year with growth in service revenue and contraction and EBITDA margins by 1.9 percentage points. But sequentially, service EBITDA increased again the last two quarters and up it was up 8% from quarter 2 to quarter 3 with increased margin of 1.2 percentage points. Now looking at net profit, 3rd quarter net profit was at $40,000,000 up 5% year on year and up 7% higher quarter on quarter with the service revenue growth that I had mentioned, higher margins and offset by higher interest expense. Now free cash flow for Q3 was $166,000,000 which was 97% higher quarter on quarter and doubled year on year, primarily due to an increase in operating cash flow offset by higher tax and CapEx payments. So therefore, as you will see on later pages, we ended the quarter with net debt to EBITDA at 1.27 times, a strong balance sheet compared to last December when we ended at 1.4 times. Next page, please. Just going through our segmental revenue. On mobile, we were at $133,000,000 for Q3, which was flattish year on year, while growing sequentially quarter on quarter for the last two quarters. This was driven by decent growth in postpaid, offset to a small degree by continued prepaid attrition. On postpaid, we grew subs by about 15,000 across both Giga and StarHub. We increased our ARPU and maintained very low churn. Now looking at broadband, broadband revenue at $50,000,000 for Q3 was higher by 9.5% year on year, again growing very well sequentially for the last two quarters. This was driven entirely by continued increase in ARPU from quarter to quarter, with consistent upgrade to our high value 2 gigabit plans, fueled by our OTT offerings, which continue to increase Disney Plus, Hotstar, Netflix, and now as you may have seen in the last week, Amazon Prime. Churn was again at extremely low levels and hence like with mobile, we enjoy very strong customer lifetime value. Now looking at entertainment, last quarter, we reclassified our pay TV segment into entertainment to better reflect the changing nature of our business and the expanded purview of this segment for us, which now includes not just traditional pay TV, but as well as hybrid TV plus OTT and now cloud gaming, which we launched in Q3. So revenue shows a 1.4% drop quarter over quarter, ending up at $45,000,000 and a drop of $2,000,000 in dollar terms. Traditional pay TV subs continue to attrition, but TV plus our hybrid platform more than doubled in the last year, while OTT subs on mobile and broadband, grew quite explosively. The objective is to monetize this sub base better, to better drive overall growth in the segment. Now, here again, we also saw good ARPU growth, which Joanne will go through. On Enterprise, our overall Enterprise business has been growing well. We ended up the quarter at $190,000,000 of revenue, representing 17% growth year on year and 6% growth quarter on quarter. The broad trend was that Ensign in particular grew strongly. Stratec has been growing well despite difficult MCO conditions in Malaysia, while Network Solutions registered growth, a small growth quarter on quarter. So with that, I'd like to hand off to Dennis to go through the financials in a little bit more detail. Thanks, Nikhil, and good evening, and then hi, everyone, and thanks for joining this call. In addition to the numbers that Nikhil has called out, I just want to call out a couple more statistics. Our net profit for the quarter was $40,000,000 or translating to earnings per share of 0.02¢. Up to the 9 month period, our earnings per share is 0.058¢. Our free cash flow for the quarter was 166,000,000 translating to 0.096¢ on a FCF per share basis, and we generated 0.20 1¢ on FCF for the 9 month period. Moving on to our guidance on the next slide. With these set of numbers and up to the 9 month mark and with 3 months left for the year to go, we're maintaining our guidance for the full year in terms of the revenue and being stable year on year versus 2020. Our EBITDA margins, which we previously had guided to 24% to 26%, we're now guiding to an EBITDA margin of no less or at least 26% for the full year. And we're leaving our CapEx guidance, which we had brought down previously to 7% to 9%. We started the year guiding CapEx to 9% to 11%, and we're now guiding to 7% to 9%. In terms of our dividend, we had started the year with guiding to at least paying $0.05 for the full year, and we are maintaining that guidance for now. And we will guide to the final dividend when we announce our full year results come February of next year. With that, I hand the floor to our Chief Consumer, Johan, to take us through the consumer results. Thank you, Dennis, and a very good evening to everyone. And thanks for making time available and spend time with us today. I'll take you through the three business lines before I hand over to Charlie. So first and foremost, mobile. We had a very solid quarter on mobile, especially on postpaid. As you can see, we increased ARPU and we added 15,000 customers during the quarter to the base bringing us to 1,460,000. That growth came from a few areas. ARPU mainly comes from an uptake in terms of 5 gs plans and to a smaller degree from roaming and the customer base basically grew both on the giga side as well on the startup side. Monthly churn really remained very low, actually decreased Q on Q and we're at 0.8%. Prepaid is a very competitive market, where ARPU is at $10 So, a few things happening there due to COVID, people moving to similarly postpaid. Segment revenue increased 2.4%. So, that's mobile. Moving to broadband, next page. Broadband, as Nicole already mentioned, great improvements in terms of ARPU, slightly decreasing base, but total revenue year on year increasing 10%. Entertainment, also that was highlighted already. Sorry, you can stay on entertainment for a second. $43 ARPU, increasing, solid performance there. PayTV classic base decreased to $87,000,000 but total entertainment subs which is the one we trace for went up to $408,000 So and churn is stable at 1.2%. Total segment revenue declined. Remind us that previous quarter we had World Cup. That's it from my side. And on that note, I hand over to Charlie. Thank you, Johan. Hi, I'm Charlie. Let me take you through the enterprise view. As Nikhil said, the enterprise business grew sequentially at 5.9% quarter on quarter and also has seen a double digit growth year on year from by 17.3%. The enterprise business, it is contribute from the effort of our network solutions, service security services and regional ICT services. Sorry, I'm Sorry, sharing some interference. Yeah. Okay. I found it. Alright. Thank you. Glad that, we know we have, you know, interest there. As you can see, the revenue mix 9 months to date remains well balanced across the 3 main areas of business. Specifically, in Network Solutions, we saw an improvement from quarter to quarter. We was affected by the ongoing challenges in the data and Internet voice services, but this was offset by higher revenue from managed services as a result of recovering interest. In cybersecurity, year on year revenue growth was mainly due to stronger business demand, specifically from the government sector as well as from our regional business in Ensign. Now from a regional perspective, perspective for the ICT business, this marks our full year 1st full year consolidation from Stratec. And we recorded an operating profit as well, which is $500,000 higher year on year. Overall, a healthy state of affairs for the enterprise business. And we continue to monitor and observe the market as we progress through the gradual but uneven recovery of COVID. That's the view for the Enterprise business. Over to you, Nikhil. Yes. Thank you, Charlie. And then just in conclusion, now with the culmination of Q3 2021, we now close off DARE 1.0 and our chapter successfully. We achieved over $270,000,000 of savings exceeding our $210,000,000 target set 3 years ago. So with that, we now set forth on our DARE plus journey. And DARE plus if you recall, the D stood for digital across everything that we do, front to back. So we're doubling down on digital. The A stood for accelerating value creation for customers as well as for our own business. R was for realizing growth without frontiers, expanding the definition of what we do organically, but also, continuing our M and A. And then the E was really paramount. E, experiences that enrich our customers' lives from connectivity, but beyond connectivity to the digital experiences that delight our customers. So with that, we'd obviously like to invite you all to our Investor Day on November 22nd, where we will share more detail on their plus, both in terms of our business objectives, and our strategic objectives and our business plans, but also in terms of the cost savings and value objectives and our business plans, but also in terms of the cost savings and value creation targets, which will be no less ambitious than Adaire 1.0. So with that, I believe, Amelia, we can end this segment of the presentation and back to you. Thanks, Nikhil. Would you like to continue on to share your opening remarks for JOS, please? Yes, please. So just a few opening remarks and then I'll hand off to Dennis to go through JOS and the acquisition and rationale in a little bit more detail. The first point I'd like to make, is strategic, that this is a material step forward strategically, for our regional ICT segment on top of the acquisition of Stratek that we made a couple of years ago. The acquisition of Joss Singapore and Malaysia adds significant revenue. It adds material Malaysia presence and it adds a material customer base. The second point I'd like to make is that the transaction is financially accretive. It brings material revenue as I've mentioned, but it is also accretive to EBITDA and net income. And then the third point I'd like to make is that the acquisition creates a platform very important for a strong partnership with our friends at HKBN to enhance our capabilities jointly towards end to end solutions between Singapore, Malaysia, Hong Kong and the Greater Bay Area, both in terms of ICT as well as connectivity solutions and how actually the both of those come together. But with those three key points, I'd like to hand off to Dennis. Thanks, Nikhil. Give you an overview of Hong Kong broadband JOS. And we're now at the close of this transaction. StarHub will be the majority shareholder of JOS at the close of this transaction. The JOS Singapore and Malaysia operations have spanned across 4 offices, 3 in different cities in Malaysia and obviously one in Singapore. Over 30 years of experience, over 1500 customers. So it's a very, very diversified customer base across very many customer segments verticals, and certainly over 400 IT professionals. At the close of this transaction, StarHub will be a 60% shareholder. And Hong Kong broadband will retain a significant minority in the form of 40%. Together, we will be strong partners in the foray in terms of taking JOS forward in both Singapore and Malaysia. The consideration is estimated to be $14,900,000 for both the Singapore and Malaysian operations. Just a quick overview of the business that JOS is in, very much entrenched in the ICP space, very similar to the enterprise business that we have within the Saab family as well as the Stratec acquisition, which we completed in July of last year. And this certainly adds to the footprint in terms of our broadening of our regional ICT capabilities as well as customer footprint. In terms of the verticals and the product verticals that Hong Kong Broadband is in Chorus is in, the next generation infrastructure, managed cloud as a service, managed security services, end user computing and digital solutions, again, very much in line with the lines of business that we have been exploring and expanding our capabilities within Sahab Group. The rationale for the transaction, and as Nikhil has highlighted, it is financially accretive from day 1. The numbers which are represented in the blue bar in the middle represent the contributions or the estimated contributions based on the 9 months actual financial performance of JOS Singapore and Malaysia for the 9 months. The financial year ended in August of 2021. So this is just an estimation of the last financial year. Naturally, going forward, the financial year of JOS will be synchronized with financial year of start up, which will be a calendar year basis. So for a 9 month period based on the last financial year, estimated to contribute $86,000,000 to our revenue. And those numbers are now estimated on a pro form a basis in terms of the revenues our total revenues, including the JOS operations. So the pie chart on the right now represents the proportion of the contributions of the various lines of business in our enterprise business. Going forward, we estimate that the JOS operations will contribute about 14% of the total enterprise revenues going forward. As a result of that, if you look at that, including the regional ICT business that Stratec contributes as well as the cybersecurity operations through Ensign, it is a significant increase and diversification and enhancement of our capabilities within the enterprise business segment. The final slides in terms of the value proposition, I can go to the next slide please. So with that, we bolt on JOS to the STAHLP family and the Ensign contributions as well as Stratec. It will be a significant acquisition of skill sets through the 400 professionals that will be joining the staff group. The 1500 customer base that JOS contributes to the diversification as well as the expansion of our capabilities and customer segments, both in Singapore and Malaysia. And it will provide a footprint for us in terms of developing and joint developments of ICT solutions and digital solution capabilities as well. And the final slide, if you look at the footprints, you see the customers being scattered across the region and to the point that this enhances significantly our customer base, our reach and our ability to provide cross selling opportunities as well as end to end solutions leveraging on our networks of both Hong Kong Broadband and Starhub. In terms of value proposition, we have agreed with the Hong Kong Broadband team on a reciprocal purchase commitment at the onset. And we will be leveraging on our ICT capabilities on both sides to enhance our propositions both Singapore and Malaysia as well as to the Hong Kong Broadband JOS operations that they are retaining in Hong Kong. Together, we will also be exploring other opportunities that leverages on startups and Hong Kong Broadband's digital platform capabilities and very similar skill sets that we have been building and expanding on. And this will we expect this partnership to be very accretive and we welcome JOS and Hong Kong Broadband as a strategic partner to us going forward. Back to you, Aminya. Thanks, Dennis. We'll now open the floor to questions. To join the question queue, either click on the base hand button or indicate your name and organization in the chat box. I'll call upon your name when it's your turn to speak and then you can unmute yourself and conference directly with our senior management. So first on the queue, I can see Neil, you have your hands up. Yes. Thanks, Emilia. Thanks, Nikhil, Dennis. I've got 3 questions. The first is on the mobile side. Could you give us a sense of what is the trajectory of 5 gs adoption within your customer base? Where does it stand now? The second question is, I suppose it's a bit more philosophical. On the entertainment side, as you see the OTT take up go higher, where do you I mean, where do you see things like 2 or 3 years down the road? Is it largely nobody has a set top box sitting on everyone's on OTT? And how does the ARPU differ? And the 3rd is more to do with your acquisition strategy. It would be good to get a sense of what the parameters are, whether it's ROIC related or ROE related or margin related. Yes, those are my three questions. Thank you. Thank you, Neil. Johan, could you take the first two questions and then Dennis for the 3rd question? I can. Thanks, Neil, for the question. On the first one, the mobile 5 gs, we actually closed last quarter north of 250,000 customers on 5 gs, well north of 250,000. So that gives you an occasion to calculate a little bit of percentage. We do see appetite for customers picking up 5 gs on the back of devices, but increasingly also on 5 gs SIM only. And that as you probably concluded already and saw in the presentation has led to the ARPU increase. So that's a very promising trajectory and obviously in line with our strategy. We have been deploying things like cloud gaming, NVIDIA in September and that's also why we are very active on offering various OTT solutions in combination with our mobile plans like Disney Plus which is a nice segue into your more plausible question around where is the TV business standing in 2, 3 years from now. We obviously want to deliver a world class experience when it comes to TV entertainment. And obviously TV entertainment is no longer restricted to a large screen at home. We therefore offer a unique proposition to customers which combines live channels with the best of the best in terms of OTT. We have Netflix, we've got Disney Plus, we've got Amazon Prime, we've got Hotstar And in most cases, we're the only ones having those in the country. And we see that customer satisfaction for this value proposition is significantly higher than it has been on the traditional linear channels. Does the set top box play a role in that? For the foreseeable future, yes, because it does deliver an integrated experience and it does offer possibilities and solutions which we can offer to customers which we probably could not do with an app, although we are working on that for sure, no doubt about it. So we keep our options open and we want to cast the net as wide as possible when it comes to these entertainment propositions to be delivered on the back of home broadband mobile as well as in combination with the classical TV. You may have also seen that we've launched as you can see probably from our virtual background not too long ago our new hub bundle which is an integrated bundle with mobile 5 gs, home broadband, Netflix and Disney plus So stay tuned and hopefully that's answering your question before I hand over to our acquisition to Dennis. Thanks, Johan. That's clear. Thank you. All right. Hi, Neil. Those are the acquisitions that we've made over the last few years when we started off with Exel, which we eventually folded to Ensign in 2018. Since then, we've done Astra Tech and now JOS. We always have identified the enterprise segment as a growth segment and the opportunities around that. We look to diversify our customer base and that's always one of our objectives of the acquisition strategy. The other one is acquiring skill sets and capabilities and this is also something that JOS brings with. And the other one the other vertical that we look at is technology. So with this, we focus very, very sharply on these three objectives in terms of delivering value to the overall business of the Sahab Group and to capitalize on growth opportunities. Eventually, obviously then leading to ROIC and ROE targets that we've set internally. So that's part of our acquisition strategy. And this most recent acquisition of Jaws is very much in line with what we have guided the market to. Yes, maybe I could add to that a little bit. I think the key thing to emphasize from our perspective is we're doing our acquisitions for strategic benefit to further our strategic objectives, right. So when you looked at MyRepublic and the acquisition of the broadband business, we augmented our position in broadband, a key segment for us, where we and it took us to sort of close to parity leadership position in broadband, which is really important because we've talked about Infinity Play. We've talked Johan talked about driving multiple product to the base. The household is the anchor of that. So that was really strategic. Achieving a leadership position in the household was really strategic for us. Now when you look at JOS, we've also talked about in the past, bringing together cloud security and 5 gs. And we're really well positioned to do that because we have a dominant cybersecurity player in Ensign. We have a leadership ICT business in terms of Strattic. But now we've increased the scale of that with respect to JOS. And we have a leadership managed services ICT and network solutions business within StarHub. And we can use that to bring together these converged cloud security and 5 gs use cases for customers. So we further that strategic objective. Now the great, I think the fortuitous thing that we've managed to do is further our strategic benefits with these acquisitions in a way that's near term financially accretive. In fact, day 1 financially accretive. So we enjoy the benefit of achieving these strategic benefits over time, achieving strategic synergies over time, with being able to de risk that substantially by achieving day 1 financially accretion. So that's the way I'd put it from my perspective. Thanks, Nikhil. Thanks, Dennis. A quick follow-up. I just want to get a perspective like, yes, I mean, if a company is profit making, it will be financially accretive. But in terms of return on capital, how do you all think about it? And are the acquisitions I can understand you're acquiring franchises and customers. But in terms of an ROIC perspective, are they somewhat similar to what your own company is doing? Or is it something that you're thinking might be slightly lesser? Because we don't have a lot of details on these acquisitions, right? Or is it something slightly lesser, but there's scalability that it gets to the same sort of return on capital? And what's the sort of timeline? A little bit of color on that would be great. Yes. The intent is certainly not to dilute our ROIC targets, right? The intent through M and A is to enhance our ROIC targets. We think of strategic benefits as benefits realizable, not over a 5 to 7 year timeframe, but over a 2 to 4, 3 to 5 year timeframe. And as I've mentioned, when we're able to do that by the de risking that we can enable by being near term financially accretive, we think that's a good thing to do. But Dennis, anything to add? Yeah. I'll just I'll just want to add, certainly when we identify potential opportunities and targets, we also look at our partners that we will start building a strategic relationship with. With the MyRepublic team, we saw them as bringing on capabilities to enhance our staff capabilities on a vice versa basis. With Ensign, we saw the strategic partnership with Temasek and what they could bring to the table. And now with Hong Kong Broadband, this is something that we see significant opportunities to leverage on the infrastructure in Hong Kong. And for Hong Kong Broadband to leverage on our infrastructure here in Singapore and what we've now built in Malaysia. So we look at that from the angle and over time through the synergies that we generate, we expect to bring it to our ROIC targets as well as enhance our ROIC targets. Well said. All right. Super. Thank you, gentlemen. Thank you. Thanks very much. Thank you, Neil. Next up, we have Annabeth. Annabeth, please unmute yourself. Hi, good evening. Can you hear me? Yes. Hi Annabeth. The classic greeting of our times. Okay. Thank you so much for the presentation today. I have a couple of questions on the overall business update as well as the acquisition in there. So maybe we can start off with the JOS acquisition just to follow-up on what Neil's asked. I noticed that the transaction size was relatively small, RMB 14,900,000. So you talked a bit about how you expected it to translate into gains with StarHub. But what's the bigger picture here for how it will shape the future M and A that StarHub might pursue? For example, you mentioned the Greater Bay Area. I think last time, Nikhil said that ASEAN will be the focus for the regional that the service EBITDA margin, it was revised in part due to postponement of IT Transformation OpEx. So why was the spend postponed and how do you expect that to affect next year's margins outlook? So in a way, is it just kicking the can down the road and we can expect thinner margins next year. Then I have a question about the entertainment segment. I saw that the ARPU is up and the overall subs up, but the segment revenue is down. Could we have a little bit of color on that, as well as the downtrend in broadband subs? Is this because of unbundling? Yohan mentioned there's a slightly decreasing base. So are you okay with that? When can we expect stabilization in the subs and the ARPU and headline revenue? And my final question is on DARE plus I understand that more details will be forthcoming on the 22nd at Investor Day. But because we are talking about the 5 year transformation plan before MVNO's launch in 2016. So in 2015, the Q3 Pat Me and I understand that there was the accounting standards change, but the Q3 Pat Me at that point in time was about 3 times as much as what you've announced today for net profit. When can we expect near term recovery to pre COVID levels for the top and bottom line, as well as a longer term recovery to what we might think of as pre-twenty 16 levels, especially because there have been exits in the MVNO market. So one might reasonably expect that the competition is receding. Yeah, that's those are my questions. Hope we can get them all in one go. Thanks. Okay. Thanks, Annabeth. That's a lot of questions. Maybe Nikhil, could you start by giving your thoughts on her first question on jaws and the larger M and A strategies? Denise, you could add on to that if you'd like. And then same for you Nikhil and Dennis to also go through her last question on debt plus and bottom line recovery. And then we'll go to you, Yohann, next. Yes. So, Anurag, the bigger picture in terms of JOS is, I think what you've seen in our numbers is that we have transformed our enterprise business quite significantly, right? And that really goes in 3 parts. We've created and acquired and worked together with Tomasik on creating a large and prosperous cybersecurity business, the leading player in Singapore. We acquired Stratek and Stratek has grown well over the last year. And we've continued to work on our network solutions business, really taking it forward for the new year, working together with Ensign and Stratek. So the bigger picture is this is very much part of that picture, right? So we've added material scale to our regional ICT business, material customer footprint to our regional ICT business. And we've geographically diversified that media regional ICT business even more with a deeper presence in Malaysia. The other thing that we hope to do is drive the regional ICT business forward in terms of capabilities as we've talked about with the capabilities that JOS brings to the table, which are similar to Stratec and the ICT business and Network Solutions, but also a little bit different. So there's an ability to weave together a composite package of capabilities against a much, much broader pool of customers. So, sending more to an expanded pool of customers. And then the third thing, as Dennis talked about is the potential of our partnership with HKPN. So the potential of this partnership is comes in lots of forms and flavors. But one key element of that is, we believe just to pick one example that there was a significant desire and demand for MNCs and corporates that sit across Hong Kong and Singapore, Malaysia to be served with end to end solutions across not just ICT but also connectivity and combined solutions that incorporate both ICT and connectivity. So through this partnership between us and HKBN with JOS as kind of the platform that fuses it together, we have the ability to deliver those end to end solutions. So when I say Greater Bay Area, I don't mean StarHub going and acquiring something in the Greater Bay Area. I mean StarHub working with our great partners, HKBN, who do have that presence in Hong Kong and the Greater Bay Area through JOS to provide those kinds of end to end solutions across the region, not just Southeast Asia, but into Hong Kong and the Greater Bay Area. But that was just one example of the partnership with HKB and there are others. Dennis, anything to add? No, I think, I mean sums it up. Okay. On DARE plus do you maybe want to take a crack at that? I didn't quite understand the question. Okay. So, Annabeth hi, Annabeth. Good evening. I think you have a couple of questions. 1 on the spend postponement into 2022 and how that potentially impacts our margins for next year. And the second question around the recovery, eventual recovery of our profitability to perhaps levels that we saw about 5 or 6 years ago. I'll take the first question regarding postponement. This is not deliberate. We are embarking on a major IT and digital transformation initiative across start up. This is effectively to transform our business model and take it more on an online digital model. In recognition of what our customers are looking for and in recognition of how we should operate as company going forward in terms of the efficiency, as well as the customer experience that we aim to deliver. These are major transformation initiatives and management is closely managing this and defining the scope of work with the vendors as well as very carefully selecting the right vendors and partners for us in this journey. So as part of this, we were envisaging incurring some of these expenditures in 2021. However, given the complexity of the initiatives we're undertaking, some of this has now been deferred into 2022. Naturally, this mathematically would definitely have impacts into our margins in 2022. However, I want to do call out that these are essential investments, and these are investments for future savings and future growth. So this is not our next step plus is focused on both growth and savings, bearing in mind that that one point zero was primarily focused on savings. So this is going to generate our future growth in our business model and top lines as well as generate savings and efficiencies across start up. So for 2021, it's not just a pure postponement of these expenditures that have led to an improvement in our margin guidance. It's also the very rational and very disciplined cost management optimization that we have undertaken from the start of this year in recognition of the challenging business environment that we're operating in. The business environment continues to be extremely challenging with although we have a number small number of MVNOs exiting the market, we still have plenty of MVNOs that are still around and still entering the market. So it's not a case where a number of players have exited and we're now down to a handful. It's a case where we still have more than like 15 or 16 brands that are currently operating and competing the market. So this is the reality of what we're dealing with. For as long as there's a fragmentation of brands that exist in the market, we expect the landscape to be challenging. We are looking to monetize on 5 gs. We are looking to leverage on differentiation through customer experience as well as the various products and services that we've recently launched in the form of cloud gaming and others through content as well. We intend to leverage on all these recent launches as well as the experience through the digital platforms that we will provide to our customers to obviously enhance our competitive position. Through that, unfortunately, it's not going to be a magic pill. It's not going to be a short term exercise. It will be a medium term exercise, but we are confident that we'll deliver the outcomes as a result of that. Thanks, Dennis. And, of course, before we go to Yohan, does that answer your three questions to Nikhil and Dennis? Yes. Thanks, Dennis and Nikhil. I just wanted to clarify the point that Dennis made about the mathematical sense. So does that mean then I just want to be clear about this. Does that mean that the service EBITDA margin next year will be lower than what we're seeing in 2021? Or do you actually expect it to be stable because of offset from some other factors that, you know, we're not we're not aware of at this stage? So, Annabeth, in line with our practice, we do not guide beyond our current financial year. So, I will just abstain from providing an actual guidance to our FY 'twenty two numbers. We will provide guidance when we announce our full year results in February of 2022. So that's the point that we will announce our results. Obviously, there are various moving parts. Our lines of business have now expanded dramatically. It's been diversified significantly. The mix of revenues as well as the margins that each of these lines of business delivers are quite different. And of course, we're making the investments for 5 gs as well as IT Transmission. So all of that will be taken into consideration when we guide the market next year. Okay. Thank you. Okay. Yes, Johan. Yes. Good evening, Annabeth. To answer your two questions, first one around entertainment subs. So the bulk of the revenue is still coming in obviously from the what we call classical pay TV subscribers and as you have seen that base is still declining. And beyond that there is obviously 2 other elements of revenue in that particular category. It's the enterprise TV revenue as well as advertising. As you may have seen in the notes, advertising actually had been a bit of a subdued quarter. So that's one of the reasons why the revenue Q on Q is down a little bit. And also on the enterprise, as you can imagine with the current port situation, there is a bit of pressure on that one as well. The good thing is that the ARPU is going up and that the total entertainment customers are growing as well. So, let's see in the next few quarters how that's going to pan out. The base is healthy, which is good and the new technology in terms of OTT is increasing. Moving to home broadband, that's basically a I would say temporary effect. We you mentioned the word unbundle I think in your question. To a certain degree, there is a bit of unbundling due to legacy products and services. We expect that to stabilize this quarter. That's also the main reason why the ARPU has been increasing quarter over quarter and that year on year we actually have recorded almost a 10% revenue increase. The other parameters driving value and ARPU are a shift to the 2 gig plans. We see a healthy uptake on customers upgrading themselves to 2 gig plans on the back of fast speeds and better Wi Fi connectivity. And also on the back of differentiation in terms of combining more broadband with OTT plans like Disney Plus, which we started doing earlier this year, which we did in a combination with a small price up is helping to drive revenue and ARPU. Hopefully, that's answering your question. Yes. Thanks, Yohann. Thanks, Annabeth. Thanks, Annabeth. Next up, we have Sachin, please. Hi. Congrats, management on a good set of numbers. Thank you. Two questions. Yes. So a few questions. Firstly, I mean, sorry to ask this question again on the broadband. I mean, is there a decrease in the number of total households in Singapore or have you lost market share in the fixed broadband? It should be, it's a, I mean, is it a service quality issue? Because we have lost some lower end, low ARPU customers in that sense in the fixed broadband space. And how soon this can be addressed? That's question number 1. Number 2, your guidance for the service EBITDA margin seems very conservative given that it's almost 30% in the 9 months and you're still guiding for 26%. Are we talking about heavy promotions in 4Q so as to reverse some of the subscriber losses, that kind of stuff? Or is it a very, very conservative guidance? That's question 2. And the third question is on Joss. If I heard correctly, you said 400 people work at Joss. And, so just I think you did tell it's 15% of your enterprise revenue, but the revenue per employee looks very, very low. Does it imply that, there's a, it's like, not doing well in terms of, it's it's a bit surprising to me, no, that 400 people, employees are producing such a low revenue at Joss. If you can disclose a number and how to look at that number in the sense, can the same number of employees really produce a lot more revenue? That's my question. Yeah. Thank you. All right. Thank you, Sachin. Johan, maybe we'll start off with you for the question on broadband. Absolutely. So Sachin, first of all, good evening and thanks for the compliment and thanks for spending time with us. There's no reason to panic in home broadband. Let me clarify that upfront. If you look at the media's backdrop, you see we have been the most awarded actually in network over the last 2 years. And one of the prime awards we have is on the home broadband side. And also if we look at Net Promoter Score and Brand Health Tracker on home broadband, it has been increasing quarter over quarter. So what is happening in home broadband? I understand your question. Let me try to clarify this a little bit more. In the good old days there was cable broadband and cable TV which we have sunset. And as customers move to what we call IPTV, people needed a fiber connection to watch TV. So there are a number of customers which have this provisioning where they get a fiber connection to watch TV. And as we go forward into new technology OTT, there is no need for these customers to have any longer these fiber lines. So that's actually the reason why fiber home broadband seems on the surface over the last few quarters a declining number of customers. But there is as you probably concluded already for yourself little to no value to that. Now the total market interestingly enough year on year is rather flattish. The number of households is not very much growing. Last quarter Q2 to Q3, we only saw an increase of at least 0.2 assets of 1,000 households. So on the subscriber market share, we have been proceeding a little bit, but you understand now the background of the profile of these customers. However, on the revenue market share, we have been growing significantly over the last four quarters, which is probably a more correct parameter. And also our ARPU obviously has been increasing. And as I mentioned earlier, following the question from Annabeth which was in a similar direction, we expect that to stabilize this quarter. Hopefully, that's giving you the context and the color to your question to put it in context. But we are the most awarded network in Singapore. I just want to highlight that once more. Thanks, Achin. Hey, Daphne. Thank you. Dennis, would you like to take the other two questions on our service EBITDA margin guidance as well as JOS? Yes, I'll take the second question and Nikhil probably can take the last question on JOS and revenue from employee. Sachin on the guidance, typically if you've looked at our numbers for the last few years in terms of the trending in Q4, historically Q4 margins are relatively and proportionately lower than the previous quarters. There's a number of reasons for this. One is we typically incur significantly higher advertising promotion expenses within the quarter as we exit the year on a note, obviously, the run rate in subscriber base, as well as promotional activities, you know, around each of our lines of business, whether in consumer or enterprise, something that we want to exit the year on a strong basis. And this is something that we pay a lot of attention to, you know, in Q4. Traditionally, in Q4, we also have a bunch of of other costs around repair and maintenance of our networks, deferment of some of this that have been only when and considered essential. And so this is also forecast and planned for Q4 typically in each year. And for 2021 in particular, we are actually expecting to incur some part of the initial cost of the IT transmission initiatives that we're undertaking alluded to as part of the DARE plus program. And so these are upfront investment costs that we expect to incur in Q4. So as a result of that, it does lead to a relatively proportionately lower margin in Q4. And therefore, our guidance for no less than 26%. So we are expecting to exceed the 26 percent service EBITDA margin for the full year. Nikhil? Yes, Sachin, I think Sachin, thanks for the astute observation on the revenue per employee. We see this as an opportunity. We see it as an opportunity because it's an opportunity to drive more revenue into the JOS space. So when you look at the JOS revenue base and when you look at the customer footprint, what that shows is revenue, it shows volume, and it shows engagement, and it shows engagement with a large customer base. Now what we want to do is drive more product into that base and that product will come out of StarHub Network Solutions. It will come out of Ensign, it will come out of Stratec and it will be focused on 5 gs and connectivity. It will be focused on cloud and it will be focused on security. And that is an element of IC versus as well. And then the other thing we want to do is, as we talked about DRIVE end to end working together with HKBN into that base. So the objective here is to use JOS to use its employees, to use its customer footprint and volume of engagement, and just do a lot more with it. That's really very much in line with our regional ICT strategy and our converged strategy across our enterprise business around cloud security and 5 gs and connectivity. Thanks, Nishu. Please stay tuned. Yeah. Thank you. And I should say, we're very happy that we were able to do this in a way that's financially accretive day 1. Okay, great. Okay. Thanks, Achim. We'll take the next question from Arthur, please. Hi. Thanks for the opportunity. Three questions, please. Firstly, going back to this JOS acquisition, I'm just wondering how you see this impacting the profitability because if you just look at the EBITDA, it seems to be pretty thin at just $2,000,000 Are there any target cost savings that can be driven? Is it or is the position really just to cross sell on on the other services? Also, any color on the growth momentum of JOS over the prior years? I'm just wondering maybe this $2,000,000 is just a function of the COVID environment and maybe it's been more profitable in the past. Any color there would be great. Second question I had is with regard to Disney and broadband. I'm just wondering how does this Disney deal actually help you? Because when I look at your broadband subspace, we're not really seeing any expansion impact. It's been it's been declining. How should we see the benefits as tripping down into StarHub's P and L? And lastly, with regard to mobile, if you could remind me how big a segment was roaming prior to all of these COVID issues in the past. Are you able to provide any guidance on how the initial trends have been coming around with the VTLs now in place? Thank you. Thanks, Arthur. Dennis, would you like to take the first question on jaws? Yes. So Hong Kong Broadband actually completed the acquisition of the JOS Group back in 2019. And this group obviously is wider than the Singapore and Malaysia operations includes the Hong Kong, China and Macau operations, which Hong Kong broadband is retaining. The profitability of the entire group is something that the Hong Kong broadband team has actually worked on the last couple of years. And right now, they do see and through the discussions that we've had, they do see a significant opportunity for us to capitalize and leverage on our existing Singapore and Malaysian footprints to generate the synergies. Now the cost synergies that are very natural and something that we can easily identify as far of lower hanging fruits. But the cross selling opportunities and the synergies that can be generated through the joint operations of our enterprise business that Charlie is leading in Singapore along with the JOS operations in Singapore and our StrathTech team in Malaysia along the JOS Malaysian team and the diversification of the customer footprints as well as the enhancements of the solutions that are being provided by both groups is something that will generate the synergies going forward. So we see good opportunities for us to execute on these plans and strategy to actually do to execute on the cross selling opportunities as well as the building of capabilities in terms of the solutioning capabilities and solutions that we actually offer to our customers. So, that's something that we believe is going to be significantly accretive to what we have seen in terms of a standalone jobs and operations that's coming to the startup family. Okay. Thanks, Dennis. Johan, could you please take the next two questions? Absolutely. So thanks, Arthur, for the question. So first of all, the value of Disney plus in terms of our business activities. Disney Plus is, I would say, very value encrypted because we bundle it. It's not so much specifically linked to a specific tariff plan or anything else. So, where is the value from Disney Plus coming back to StarHub? You may have seen that we have been actively bundling this with 1 gig plans and 2 gig plans on the home broadband side and beyond that on 5 gs plans. What we did see following that are two things. Number 1 is a shift in customers taking a specific tariff plan and hence opting for a plan which delivers us a higher ARPU, de facto 2 gig plans. Also, we used it to bundle in Disney plus for the 1 gig plan and reprice our 1 gig offer, which again drives ARPU. Basically de facto factored it in on the 5 gs plans. And earlier on, we basically gave some more flavor about our 5 gs customer base, which partially has been driven by that specific offering. So in total GS, maybe you may question that, but it's more a bundle strategy in terms of tariff plan mix to be very specific. On the roaming, roaming is a fraction of what it used to be before COVID. And typically, we don't release that level of detail in terms of information about specific sub product lines. Suffice to say that we are looking forward to some restoration of travel and this business line picking up, but that will be subject to government regulations, travel policies and so forth. And obviously, the bulk of roaming, as you know, will come from the region rather than from the rest of the world. So, that's something we keep a close eye on and monitor as we go forward. Hopefully, that's answering your question. Thanks, Kiran. Just to clarify on the Disney issue, I know that you've mentioned that it's a bundling strategy and that you've seen ARPUs increasing for many reasons. Right? It could be because of the expiry of the discounts or the upgrading in plans. But if you look at the expansion in ARPUs for the broadband, it's roundabout $2 maybe as compared to what you have to pay for Disney when you bundle it on a 12 month basis. Would profitability have been better if we weren't seeing StarHub do this? Well, Disney Plus is a long term game if I may call it that way. I mean we obviously use it for tactical reasons, but it's part of a strategy to bundle and basically convert customers to payable subs over time. So, it's not within the specific 1 year or 6 months period that we evaluate that. The ARPU uplift is basically coming in broadband from 2 main drivers. Number 1 is the reduction of promotional benefits which we have been giving to customers. 2nd is the upgrade of plans of customers taking higher plans on the back of Disney plus So we are looking at the business case to be honest, we look over a longer period of time not within the 1 year. I think the other way to look at your question, Arthur, is to look at the revenue growth and the ARPU growth with the Disney plus and OTT strategy and the composite broadband strategy that we have versus the rest of the market and in particular the other M and Os where revenue has really been flat to declining, ARPUs have been flat and customer growth is customer growth, but really monetization is what everyone is focused on, right? So yes, the growth that we've achieved in broadband and the ARPU uplift is a factor of a number of things, including flushing out a little bit of the kind of legacy discounting as well as but Disney Plus and OTT and what we're doing on Infinity Play is clearly a big cornerstone for us. And the next is cloud gaming. And we think it has a big reason to do with why we're frankly quite unique in growing revenue as fast as we are in this segment and raising ARPU in the way that we are in this segment. Thank you. Thanks, Arthur. Thanks, Arthur. We'll now take the last question from Paul. Thanks for the presentation. I have 5 questions. No, I'm just kidding. I just want to exit this. Okay. Sorry, for the cybersecurity, I understand it is volatile quarter by quarter, but looking at the recent numbers, it seems to be trending at least $70,000,000 plus on a quarterly basis from now $40,000,000 plus. I'm just wondering, could you share whatever colour possible on what's giving you this uplift and how sustainable is it? And also, I'm not sure if I missed sorry if I misquoted you, Nikhil, but I think you mentioned that cybersecurity is dominant. So I just wondered if you can maybe elaborate a bit more on this so called dominance, where it is, if it's perfect. Yeah, I'll try to share what I can and Dennis can elaborate. Let me clarify on Ensign's position. Ensign's position, I think the phrase that I've used over a period of time is it's the leading Singapore cybersecurity player serving government and large enterprises. So in serving government and large enterprises in Singapore, and sign leads. So it is probably not appropriate for us to talk about the nature of the contracts and what they do with who in Singapore suffice it to say that they are large contracts, they're highly critical and that with government and large corporates that do important things. The growth is sustainable. We saw strong growth over 2020. We saw strong growth in 2021. And the budget for 2022 is similarly strong. That's underpinned by an order book that continues to be strong and continue to grow as we move into the new year. The other thing that we're focused on with Ensign is continue to move the capabilities forward, so we can perpetuate this kind of growth profile for the foreseeable future. The growth areas that we focused on are obviously to continue what we're doing here in Singapore with the customers that we're talking about to regionalize more the Ensign business into Malaysia and other markets, to move into more aggressively into new growth areas like Cloud Security, 5 gs Security, OT Security. And you can see there's a flavor coming through because all of these new growth areas are very convergent with Stratec, the convergent with the Network Solutions business at StarHub and the convergence with Joss. So there are, so the current growth trend is strong on the basis of the existing business in terms of what they do and who they do it with. But, and there's a growth plan to do it with the same thing with more customers and regionally, as well as to put in push into new areas and capabilities to perpetuate that growth profile. Did that answer your questions sufficiently, Paul? Yes, sure. Thanks. Is there sorry to just trouble you again. Is there any particular I understand cybersecurity is obviously a necessity in a ways, but is there any particular trends that you can share the cut that is coming from the customers and whatever feedback, any general trends that's helping you get up into this new level of revenue as if it's possible, but I understand it's the confidentiality of it. Thanks. Yeah. Cyber security is an imperative. It's a board level issue. The level of threat intrusions is up globally, particularly through the COVID period. The necessity for government and enterprises to bolster the cyber posture, both for state actors as well as for private bad actors is a clear imperative. What you call the attack surface as we look forward because of IoT is much, much more. So the problem is much, much more acute for government and large enterprises and the need to both build for a government or an enterprise to either build your own cybersecurity assets or to outsource the management of your cybersecurity posture, it continues to grow and escalate. So for all of those reasons, there are strong tailwinds behind the cybersecurity business. And Ensign as the leading Singapore player servicing government and large enterprises is very well positioned. Okay. Okay. Thanks so much, Nikhil. Okay. Thanks, Paul. And with that, I think we've answered everybody's questions. So we've come to the end of today's call. Thank you, everybody, for spending your Wednesday evening with us. As always, please feel free to reach out to us if you have further questions. Until next quarter, please stay safe and have a lovely evening. Thank you. Thank you, O'Hara. Thank you. Bye. Bye.