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M1 LIMITED
(M1 SP) 19 April 2010
n Otherwise, results were in line with expectations on the back of a strong economic
recovery. Pretax rose 9% YoY to $47.8mil.
n Mobile service revenues which account for 79% of total service revenues, grew 2% YoY
to $143.3mil. With resumption of foreign worker influx, prepaid subscribers were a bigger
growth contributor (+17% to 863,000) YoY basis. This helped offset 8% YoY fall in prepaid
ARPU to $15.
n More encouraging is that postpaid net adds were a stronger 7,000/mth in 1Q10 (to
933,000), vs 5,700 for prepaid. M1’s launch of iPhones in December 2009 also helped
churn to fall to 1.4% from 1.6% in FY09. While postpaid ARPU of $59.7 maintained at 1Q09
level, this was a slight 2% decline from 4Q09.
n Uptake for M1’s fixed network services contributed $5.9mil revenues, an increase from
$5.3mil in 4Q09 when its acquisition of Qala Singapore (renamed M1 Connect) was first
consolidated. Despite the upcoming launch of NGNBN, management does not expect a
big bang effect as about 20% of coverage will only be addressable in the early days.
n With M1’s recent launch of iPhones and rising demand for smartphones, handset sales
surged almost four-fold YoY to account for 27% of total revenues. Typically handset sales
account for 8% of total revenues.
n Sales of higher value-add phones bode well for data usage. M1 improved non-voice
services to 29.8% of mobile service revenues in 1Q10. Separate data plan subscriptions
doubled to 318,000 from 1Q09. M1 continues to upgrade its network in FY10 to achieve
42Mbps.
n Along with handset sales, handset subsidies surged, largely contributing to 42% jump in
total expenses.
n Couple of bright spots at expense level: (1) cost savings from the completion of its
backhaul network has started to come through with a 15% YoY fall in leased circuit cost
to $11.2mil (2) fall in overall deprecation rate as some fixed assets have been fully
depreciated.
n On balance, we are comfortable maintaining our forecasts. Stock is now trading at less
than 15% upside to our fair value estimate of $2.29. We maintain HOLD rating.
n Dividend yield is also less compelling now at 6-7% p.a., after share price appreciation of
83% over the past 17 months since its low.
n To reflect the group’s strategy to develop from a predominantly mobile base to become
a multi-service telecom provider, the group is changing its name from MobileOne Limited
to M1 Limited.
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M1 19 April 2010
Key Data
Prepaid 863,000 740,000 17% 846,000 2%
Postpaid 933,000 879,000 6% 912,000 2%
Total Mobile Subscribers 1,796,000 1,619,000 11% 1,758,000 2%
Net adds/month in Prepaid 5,667 -2,667 7,333 -23%
Net adds/month in Postpaid 7,000 -1,333 6,333 11%
Monthly ARPU (S$)
Prepaid 15.0 16.3 -8% 14.4 4%
Postpaid 59.7 59.7 0% 61.2 -2%
Source: M1
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