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M1 predicts further profit drop as it looks to expand IT offerings

The Singapore-based telco has brushed off its third quarter profit drop, expecting further decline as it focuses on expanded IT offerings such as its NB-IoT solution.

Singaporean telecommunications carrier M1 has released its financial results for the third quarter of 2017, reporting a 4.8 percent year-on-year profit drop to SG$32.7 million.

Service revenue during the three-month period increased 4.9 percent to SG$206.7 million, driven mainly by higher postpaid and fixed services revenues, which grew 5.5 percent and 19.9 percent over the previous year, respectively.

While M1's postpaid customer base increased by a total of 5,000 during the quarter, prepaid customers decreased by 41,000.

According to the company, this was the result of an internal audit of its entire mobile customer base prompted by the telco shuttering its 2G service, following a direction from Singapore's Infocomm Media Development Authority in April.

The audit led to the termination of inactive and dormant customers, as well as migration of customers to the company's machine-to-machine (M2M) platform, which M1 said are not included in the reported customer base.

As a result of the audit, 14,000 postpaid and 47,000 prepaid customers were removed from its books. Total mobile customer base was 2.01 million as of September 30, 2017.

Meanwhile, mobile data -- which accounted for 55.9 percent of total service revenue -- experienced a monthly average increase of 4.2GB, with M1 telling shareholders it has seen a change in consumer preferences over the period.

"With the shift in consumer preferences from traditional telecommunications to data-centric services, we are addressing their changing needs through proactive customer service management, network optimisation, and upgrades, as well as innovative and competitively priced service propositions," M1 CEO Karen Kooi said in a statement.

During the quarter, M1's fibre customer base grew 6,000 to bring total fibre base to 182,000; while the company's corporate segment made up 10 percent of its total customer base and 47 percent of fixed services revenue.

When comparing the first three quarters of 2016 to those of 2017, handset sales increased by 5.9 percent, attributed mainly to the higher cost of newer handsets.

Looking forward, M1 is predicting a further decline in its after-tax profit for the 2017 full-year, citing merely the "current outlook".

The company's current outlook comprises a focus on expanded IT solutions with services such as managed infrastructure, cloud-based cybersecurity solutions, and data analytics.

M1 expects its Narrowband Internet of Things (NB-IoT) network -- launched in August -- will drive adoption of new and innovative IoT applications, looking to trial electricity metering, water metering/flood sensors, and smart waste management, among other things.

"Our recently launched nationwide NB-IoT network will further drive adoption of new and innovative IoT applications with massive connectivity. As it is a new technology and the ecosystem is evolving, mass adoption will take time," Kooi added.

The telco first unveiled plans to build the NB-IoT network in partnership with Nokia last year, touting it as a more efficient way to support IoT communications.

Kooi said the launch would "accelerate" Singapore's journey as a digital society.