StarHub’s 3-Cent Interim Dividend Holds Steady, but Does Cash Flow Support More?

StarHub (SGX: CC3) declared an interim dividend of 3.0 cents per ordinary share for the half year ended 30 June 2026, matching the corresponding 2025 payout. Its results, announced on 13 August 2026, also showed a sharp rise in reported profit. For dividend investors, the question is how much of that profit can support future payments. [S1, p. 1] [S1, p. 25]

The profit jump came from Ensign

StarHub reported group profit after tax of S$252.3 million. But it recorded a S$245.7 million one-off gain when it ended assigned rights in Ensign and began accounting for its remaining 38.92% interest as an associate. This gain does not represent a repeatable improvement in telecom operations. [S1, p. 4] [S1, p. 7] [S1, p. 8]

StarHub said first-half group profit after tax would have been S$6.6 million after excluding that gain and the prior year’s one-off spectrum forfeiture payment. On that adjusted comparison, profit was 89.4% lower year on year. Profit from operations fell 68.4% to S$27.2 million, while revenue excluding Ensign declined 8.0%. These figures point to a tougher trading period beneath the reported profit increase. [S1, p. 4] [S1, p. 7] [S1, p. 8]

That S$6.6 million figure is an adjusted group profit measure. It should not be treated as the profit attributable to shareholders used in StarHub’s dividend policy calculation. The policy refers to attributable profit adjusted for one-off, non-recurring items. [S1, p. 8] [S1, p. 24]

Cash flow improved, with an important qualification

Net cash from operating activities rose from S$117.2 million to S$124.2 million. StarHub reported free cash flow of S$40.6 million, compared with a S$171.8 million deficit a year earlier. Its free-cash-flow measure deducts purchases of property, plant, equipment and intangible assets from operating cash flow. [S1, p. 2] [S1, p. 13] [S3, p. 5]

The turnaround owes much to the timing of investment. Capital expenditure payments fell to S$83.6 million, largely because the first half of 2025 included a one-off payment for 700 MHz spectrum rights. StarHub said free cash flow would still have been higher year on year if that earlier spectrum payment were excluded, but the headline swing overstates the change in ordinary cash generation. [S1, p. 13]

The S$40.6 million of first-half free cash flow was below the S$51.8 million final dividend paid during that half year for the previous financial year. This comparison does not determine coverage of the newly declared interim dividend, which belongs to a later payment timetable. It does show why one positive half year of free cash flow is a thin basis for expecting a higher distribution. [S1, p. 13] [S1, p. 25]

What the unchanged outlook means

StarHub said its full-year 2026 dividend outlook remained the higher of 6.0 cents per share or the amount under its dividend policy, despite lower expected EBITDA. That is management’s outlook, rather than a second-half dividend declaration. [S1, p. 23] [S1, p. 24]

The balance sheet also deserves attention. StarHub reported repaying a S$300.0 million fixed-rate note in June 2026 using cash. At 30 June, net debt was S$847.4 million, up from S$806.4 million at the end of 2025, and net debt to trailing EBITDA had risen from 2.00 to 2.39 times. Outstanding capital expenditure commitments stood at S$267.2 million. [S1, p. 13] [S1, p. 15] [S1, p. 16]

The August filing supports the unchanged interim dividend and reiterates the full-year outlook. It offers less support for a stronger payout: the profit surge was dominated by a one-off gain, and the cash-flow recovery benefited from lower spectrum spending. The next results will show whether operating profit and cash generation improve while StarHub funds its investment commitments. [S1, p. 7] [S1, p. 8] [S1, p. 13] [S1, p. 24]