1Q 2026 Business Update Conference Call

Good morning, everyone. Thank you for joining the first quarter to be 26 business to form a public call. And it's Kristal and I take care of startups investor relations. This morning, we have with us a senior management led by our chief executive, Nicole Ethan, deputy CEO and chief of consumer business Matt Williams, CFO Jackie low, and chief of enterprise business group tank it young. As usual, Nick, you'll and senior management will bring you to a quick presentation before opening the floor to Q&A thereafter. Nikhil, over to you, Bix. Thank you very much, Crystal, and good morning to all of you and welcome to our Q1-2026 earnings call. And thank you for your time and attention to the Starhub story, as always. So can we move to the first slide, Crystal? So I'd like to start by outlining, you know, where we stand and how we are positioning ourselves similarly to what I've done in past quarters and how we are driving our strategy currently in this market in Singapore,

which as you know is difficult and very complex, but going through some change. So it's a period of what we have been calling in prior quarters, a period of dynamic flux. So I'd like to go through each of these four pillars in our strategy, which is a bit the same and a bit different from what we've talked about before. So in consumer, first on the market, as we've talked about before, the Singapore consumer telco market has faced probably the most extreme price competition that we've seen in any market in the world, which as you know, was catalyzed by the fourth operator, which has created broad market down draft. So mobile service revenues in the market and for ourselves have been falling. And when set off against telco fixed structures, what we all call negative operating leverage, this really erodes profitability. Now change is underway as we've talked about and it's really from two directions, not one. First sector consolidation will create more sustainable market structure. Second, and this is something that not all are aware of, cybersecurity and resilience requirements

are eliminating the structural cost advantage that the smaller operators have had so far. So this will help market sustainability under any scenario and frankly, any consolidation scenario. So against this, our strategy and approach will continue to be multi-market segmentation. Our brands, Starhub, MyRepublic, Giga and Eight operate across both mobile and broadband and lead across each segment from premium segment to the digital segment to value segment. And what we see with the market down draft is that the premium segment is shifting to value while leading brands in digital are holding their role. So in premium, our strategy is to continue to drive customer delight and reduce our sub erosion. Our strategy at the digital end is to hold and to grow and our strategy at the value end to aggressively grow and match the market. So we intend to do all of this by frankly improving our sub monetization and hence moving the market up from a pricing perspective. And along the way,

our intent is to continue to grow our revenue market share and retain and increase our lead as a clear number two in mobile, a number one in broadband and entertainment, whatever the consolidation scenario is. Now in enterprise, which is quite a different set of dynamics, the government and enterprise spend environment is frankly quite strong. And it's driven by smart nation, digital, cloud transformation, AI transformation of our government and enterprise clients. Now, not everyone is a beneficiary here. And this is a business that's scale oriented and our regional enterprise business is well positioned to address a strong demand, but we're doing it in a differentiated way as we've talked about with our modern digital infrastructure that we've been building and have built from 2022 to 2024, which is quite unique as a platform model that's faster to deploy, more scalable, it brings more value to customers, with better margins for us. So, 2026 is the year for scaling our enterprise business and you will see this over the coming quarters.

Now, quarter on quarter revenues are lumpy with project timing, but as you can see, our one order book in Q1 grew by over 50% year on year. And this is on the entire regional enterprise business and its large numbers. So, we expect to continue our one order book growth these levels through to 50% year-on-year by the end of the first half and frankly through to year-end and that will drive our revenue for 2027 with multi-year revenues and along the way we do hope to do selective M&A that is a creative and with disproportionate positive impact relative to the consideration paid. Now our third pillar is cyber as we've talked about and we are a major telco running critical infrastructure serving government and large enterprises so we will continue to invest in cyber resilience and technology overall. All of you have seen the nation scale cyber threats in the media. This is real. And all telcos, all critical infrastructure providers beyond telco will have to invest. But frankly, we are ahead of the game. And certainly

versus the smaller operators who will need to spend and modernize to catch up. Now these cyber investments add to the security of our platform, they secure ourselves and they secure the modern and digital infrastructure platform we are serving our government and enterprise customers with. And with our customers on the enterprise side and government side, there is very strong awareness of the need for this, which further translates into our differentiation. Proof positive within the order book that you have seen. Last but not least on cyber, many of you have been waiting for news on the divestiture to our co shareholder of the 17% stake associated with the assignment of rights and then sign. We completed this last month and I will review the impacts shortly. Last but not least on cost optimization, we have a large and growing pipeline of cost savings with the automation and simplification opportunities created by Adairplus Transformation. Now, as we all know, our prior Adairplus Run Rate cost savings largely achieved targets, but with extreme price competition,

these savings were passed on to the consumer. Our next phase of cost savings is larger and we believe will translate to direct profitability uplift against a more stable and consolidated market structure. Now underlying these four strategic goals, a fortified balance sheet with large cash balances and low leverage, further fortified by the partial divestiture of our stake in Ensign with continuing divestitures. Number two, fortified by our selective M&A for enterprise that is prudent and accretive with a disproportionately positive impact in terms of delivery against large scale projects, capabilities, and will also improve our margins. And third, the ability to position and play for superior TSR positioning in the future against this current market displacement while continuing our strong dividend commitment to shareholders. Frankly, with minimal stress given our balance sheet today. So next, I'd like to cover our Q1 financials quickly. First, our revenue for Q1 was about 450 million,

down about 4% year on year. And this was largely from material declines in consumer year-on-year with a hyper competition and the continued downward base rebasing of R-POO in the market. Now we have been converting our customers to our new unlimited plus plans. And when we do so, we actually increase R-POO. So this was an offset that we hope to increase over time. Now within enterprise, our managed services business was down year-on-year and this was entirely as a result of project timing with large lumpy projects. So you should see growth resume and continue that growth trend over the rest of the year. On the other hand, interestingly, we were actually able to hold and actually grow our legacy business lines within enterprise a little bit, enterprise connectivity and carrier, largely by execution, but also by pivoting them. So overall, we expect our enterprise business with the order book that we have to grow well in 2026 and accelerate into 2027 and our strong order book trends, which at scale are a leading indicator.

Now our EBITDA for Q1 was 77 million with a year on year reduction of 22 odd percent in line with our foliar guidance. This was as a result of the revenue decline in our consumer lines, which are largely fixed cost structure. As a GAG and I have said, telco operating leverage drops straight into EBITDA. Now this EBITDA reduction, again with a largely fixed capital base, largely drops down into net profit after tax. But this is amplified a bit by the increase in depreciation and interest expense from our two bands of 700 megahertz spectrum which we took on board in July of last year. Now, as you know, we had to take these on at prices set in the 2017 auctions, which was about 180 million of two bands, which compares to the most recent 2100 auctions where two bands cost about 25 million. So really it was on a historical price basis. Next page, please. Oh, sorry. With that, I'd like to hand off to Jackie, please.

All right, thank you, Nikhil. So let me build on what Nikhil has already covered and highlight a few key points for this quarter. So for the first quarter of 2026, performance remains soft, largely reflecting continued competitive intensity in the consumer segment and ongoing market uncertainty. So on cost, operating expenditure was broadly flat year on year. That reflects the execution of our cost optimization program and the discipline we are applying across discretionary spend, even as we continue to invest selectively. Other income was higher year on year, many due to income grants and broadly in line with what we expected on a quarter on quarter basis. EBITDA for the quarter came in at 77.7 million. This was mainly driven by lower growth profit in segments where we are seeing revenue pressure. Net profit attributable to shareholders was 5.9 million, down year on year.

This is largely the operating leverage in the telco business model working against us, with lower EBITDA flowing through and compound by higher depreciation and amortization. On cash flow, free cash flow was positive at 26.6 million for the quarter. As we look ahead, we expect free cash flow to remain positive for the full year. Even as we continue with planned investment in IT, cybersecurity and network capabilities. Our bar sheet remains, NetDAB to give it stood at 2.09 times, which gives us sufficient flexibility to continue investing for the future. So with that, I'll hand over to Matt to take you through the consumer update. Good morning everybody to go through our consumer business quickly. Let me start by saying at the end of Q1, we maintain our strong number two position of mobile and number one position in broadband. But of course that's in a market that remains extremely competitive and dynamic

as Nikhil has said. In mobile, our ARPA was about flat at $21 in Q1 and that's adjusting for the seasonal factors such as the roaming travel patterns. So pleasingly resilient to the market that continues to exhibit very strong price competition. During this time, we've also grown our number of customers increasing net subscribers by 17,000. So strong performance in a market that is very competitive, as we've said. On mobile, we see our strategy working, and that's really around focusing on building quality experiences for our customers, both through the Starhub brand, where we focus on quality leadership, and on our 8GIGA and MyRepublic brands, where we focus on serving segments either around value or specific propositions. In particular, we see some highlights, so strong performance of our Starhub 5G Unlimited Plus plans which offer unlimited data, roaming, included and great value devices.

This tells us that the approach of orientating around quality is working well. And we now have a significant number of our customers on these plans and they show significantly higher CSAT and NPS. We have significantly fewer service calls thereby driving the cost to serve lower and also significantly lower churn, all without having to discount those plans. So as we continue to move our customers to the 5G Unlimited Plus plans, we think we have a lot of potential in the startup business. We also see continued strong performance of eight, including a very strong shift to 5G plans at a higher APU. In the prior quarter, we'd started the process of de-emphasizing the $8 plans in our go-to-market, and instead have been promoting the 1480 5G plan and have seen nearly a third of our customers taking this, demonstrating importantly that even in our most price segment, sensitive segment, these customers value and will pay for improved quality.

In broadband, we see sustained momentum in an increasingly price-dependent market. We have experienced output pressure with a shift to $34 in Q1 down from 35 in Q4, which is particularly a result of the mix of customers across our different brands and plans. But overall, we have gained customers in the quarter. Of note on broadband, we go to market with our three brands, Starhub, MyRepublic, and now 8. Starhub orientates around the full service experience with Hubtrooper, Home Wi-Fi installation, entertainment packages, and hubbing, so our customers can get all of their services in one place. And we continue to see that that proposition resonates strongly. We also go to market with MyRepublic brand, focused on a segment that we call Geeks and Gamers. And they are building a very significant differentiation mode around that business, including doing some very significant new things, like launching our card arena store at Suntech, which is Singapore's largest outlet

for the very hot category of gaming cards, Pokemon, and similar. And finally, after launching in Q4, our 8 brand into broadband, we're starting to see strong momentum in that business with growing broadband sales. So really balancing off against the value part of the market. So overall, I'll just close by saying we see our strategy of rebuilding market value by offering quality experiences working very well. Unfortunately, however, the market has seen at the end of the quarter, the market incumbent launching very aggressive price and promotional offers across all product categories and brands, to the extent that they now directly are undercutting value brands in the market. Unfortunately, this has sparked another cycle of price competition. With us and the other players, of course, immediately responding and matching or exceeding that pricing. As we've described before, our strategy remains to rebuild value in the market and with our customers, but we will also always compete aggressively to win with customers.

And our intention will always be to at least match any competitor offers. But look, as we close out Q1, we're tracking for the rest of the year and looking to compete very strongly in the market. Thank you. With that, I'll hand to Kit Yong to talk about enterprise. Right. Thank you, Matt. Now when it comes to enterprise for first quarter, our year on year is down by 4.8%. It is driven by many services, negative of 10.8% growth. But not to worry, it is a project recognition issue, not a demand issue. And for enterprise, Connectee and the Carrier and Voice help us to offset some of the revenue. Right, but most importantly, if you look at our order book, our order book remains strong. On first quarter, we got 50% year-on-year growth from our order book. And that is a statement for a strong demand

that we still have. this matter of converting these order books into revenue as we progress along. Now if you look at the many services revenue right as I said earlier is due to project recognition, timing and also some insights to that is that for our order book that we grow for regional managed services is more than 50% overall it's bomb both Singapore and Malaysia market. So both Singapore and Malaysia we are seeing a strong demand of our order book and it encapsulates the fact that our deliberate shifting from project services to platform-based services, platform-led digital service provider is working and we are seeing the client transiting from one of our projects to now platform-led conversation and hence our order books are improving especially in Singapore here while our traditional business, project services, still have strong demand.

Now, if I move to the cybersecurity services, that's purely enzyme, right? They also register a good services revenue growth year on year, also due to project recognition. Now with that, I pass it on to Jackie. We reflect the impact of operating leverage in the telco business. A large part of our cost base is fixed or semi fixed. Also, when we see revenue pressure, it flows through quite quickly and more sharply into profitability. So this is why resetting our cost base is a key priority to better align it with our revenue profile, customer demand, and current market realities. So on cost optimization, the program is progressing well and remains on track. So as we ramp up implementation in this quarter, we are starting to see early savings come through

and we remain focused on discipline execution against the targets we have set. And we'll share a more detailed update at the next half year results. Next page, please. So despite the near term headwinds, our bond sheet remains strong and continues to support our strategic priorities. So we close the quarter with a cash position of 867.2 million and net debt to EBITDA at 2.09 times. About 80% of our debt is on fixed rates, which give us good protection against interest rate volatility and provides great certainty around financing costs. Pre-caps flow for the quarter was positive at 26.6 million. This is important as we move into a period of planned investment across IT, cybersecurity and network capabilities. So we will continue to take a disciplined approach to capital allocation, making sure this investment pays appropriately while we execute our strategic cost management program

and maintain volunteer strength. With that, I'll pass it back to Nikhil to go over.