M1's Q1 net profits fall 6.9% on subsidies

The average M1 subscriber used 3.3GB of data last quarter, unchanged from the quarter before.
The average M1 subscriber used 3.3GB of data last quarter, unchanged from the quarter before.PHOTO: ALICIA CHAN FOR THE STRAITS TIMES

Net profit at M1 fell 6.9 per cent to $42.5 million in the first quarter on higher costs from handset subsidies, with the launch of Samsung's Galaxy S7 phones last month.

Last year, Samsung launched the S6 in April, so higher customer acquisition costs were felt in the second quarter instead.

Operating revenue fell 12.6 per cent to $257.6 million on lower handset prices and sales.

Service revenue in the quarter ended March 31 came in at $203.4 million, flat from $204.4 million a year earlier.

Mobile data contribution to service revenue rose to 53.1 per cent last quarter, up from 41.3 per cent in the first quarter a year ago.

  • AT A GLANCE

  • OPERATING REVENUE: $257.6 million (-12.6%)

  • NET PROFIT: $42.5 million(-6.9%)

M1's average revenue per post-paid user was $58.60, down from $62.0 a year ago.

The average subscriber used 3.3GB of data last quarter, unchanged from the quarter before. M1 noted that the first quarter generally has fewer days, but it is monitoring the usage trend.

Last month, M1 started offering an upsized data bundle for new and recontracting customers at $5.90 a month.

This offering is "positive" for M1 because it adds to revenues on a regular monthly basis, chief financial officer Raymond Yeo said over a conference call last night.

"The $5.90 we collect is a recurring revenue. The alternative was that we used to collect $10 only in months that customers exceeded their data bundles."

On M1's content strategy, chief commercial officer Lee Kok Chew said: "We have revised our approach and will no longer provide light content. The launch of Netflix and other OTT (Over-The-Top) services effectively unbundle content from a set-top box.

"We will focus on enabling access to content and optimise our network for streaming experience."

M1 said it expects capital spending to come in at around $140 million this year, excluding the $64 million to be paid for 4G spectrum rights. M1 will also use up to 2 per cent of revenues each year to invest in early-stage companies in complementary businesses.

First-quarter earnings per share was 4.5 cents, down from 4.9 cents a year earlier. Net asset value per share was 47 cents as at March 31, up from 44.1 cents on Dec 31.

The results were posted after trading hours. The counter closed one cent higher at $2.48 yesterday.

A version of this article appeared in the print edition of The Straits Times on April 14, 2016, with the headline 'M1's Q1 net profits fall 6.9% on subsidies'. Print Edition | Subscribe