Earnings at telco M1 suffered a fall in the second quarter as handset sales weakened.

Net profit for the three months to June 30 dropped 7.5 per cent to $41 million, while revenue fell 13.2 per cent to $240.4 million.

For the half year, net profit dipped 7.2 per cent to $83.5 million, on the back of a 12.9 per cent fall in revenue to $498 million.

The lower revenue was mainly owing to a fall in handset sales, which were down 49.9 per cent to $36.4 million in the quarter.

M1 added 14,000 post-paid customers and 24,000 pre-paid customers, which brought the total mobile customer base to 1.98 million.

Mobile churn improved to 0.9 per cent, compared with 1 per cent in the preceding quarter.

Mobile data contribution rose 9.1 percentage points year on year to 54 per cent of service revenue in the second quarter.

Fixed services revenue grew by 26.9 per cent to $25.6 million, owing to a higher fibre customer base.

Staff costs fell 2.6 per cent to $29 million, owing to lower variable performance-based incentives. Comparing with the first quarter, staff costs rose 6 per cent, owing to wage credit received in that quarter.

M1's overall customer base was 2.1 million, 6.4 per cent higher than a year earlier, and its market share was 23.5 per cent at end-April.

Quarterly earnings per share was 4.4 cents, down from 4.7 cents a year earlier. Net asset value per share slipped to 43.1 cents as at June 30, against 44.1 cents as at Dec 31.

M1 chief executive officer Karen Kooi said in a statement that the firm is investing in new technologies and capabilities, and building a portfolio of digital solutions.

"While expenditure is incurred upfront, meaningful contribution will only be upon achieving scale in service adoption over future years," she added.

Based on the current economic outlook, M1 estimates a single-digit fall in net profit after tax for 2016.

An unchanged interim dividend of seven cents a share was declared.

M1 shares closed six cents lower at $2.78 yesterday.