M1 quarterly net profit down to SG$34.5m as it mulls buyout

M1's mobile telco services brought in the most operating revenue for the third quarter of 2018, at SG$142.6 million, after the carrier added 90,000 post-paid customers but lost 152,000 prepaid customers over the last year.

Singaporean mobile carrier M1 has announced its financial results for the quarter to September 30, reporting Q3 net profit of SG$34.5 million, down 5.5 percent year on year from SG$36.5 million.

Operating revenue was up by 10 percent to SG$275 million; however, operating expenses were up by 14 percent to SG$231 million, which M1 said was "mainly due to higher handset costs".

Earnings before interest, tax, depreciation, and amortisation (EBITDA) were SG$77 million, down 3.6 percent from SG$80 million.

M1's mobile telco services brought in the most operating revenue, at SG$142.6 million: SG$129.4 million from post-paid and SG$13.2 million from prepaid after the carrier added 90,000 post-paid customers during the past year for a total of 1.36 million.

However, it lost 152,000 prepaid customers over the same period, down to 584,000, for total mobile customer base of 1.95 million, down from just over 2 million this time last year. According to M1, it holds 23.5 percent of the Singaporean mobile market.

Post-paid average revenue per user (ARPU) fell to SG$40.80 per month, while prepaid ARPU dropped to SG$10.50.

Across its fixed services, including access and IT services, M1 brought in SG$38 million in operating revenue, up from SG$30 million last year due to a higher fibre customer base and "contribution from corporate projects".

Fibre customers increased by 22,000 over the year, to a total of 204,000, with fibre broadband ARPU also slightly up to SG$38.60 per month after last year launching a 10Gbps symmetrical service .

International call services was down from SG$13.9 million last year to provide just SG$9.8 million in operating revenue; and handset sales accounted for SG$84.5 million in revenue, jumping from SG$63 million last year.

For the first nine months of the year, M1 has made SG$782 million operating revenue: SG$430 million from mobile telecommunications services; SG$32 million from international call services; SG$106.4 million from fixed services; and SG$214 million from handset sales.

The telco had last month announced receiving a joint buyout offer of SG$2.06 per share, or an estimated SG$1.91 billion ($1.4 billion) from two of its shareholders.

Keppel Corp (KCL) and Singapore Press Holdings (SPH) made a pre-conditional voluntary general offer through a joint venture, Konnectivity, which is majority owned by KCL.

M1 said this week that it is subject to the approval of Singapore's Info-communications Media Development Authority (IMDA).

"The offer, if and when made, will be conditional on the offeror having received, by the close of the offer, valid acceptances in respect of more than 50 percent of the Company's shares in issue," M1 said in its Q3 results presentation.

"Keppel has increasingly been transforming its traditional B2B business to include retail customers in gas, electricity, and urban logistics. Incorporating M1's capabilities and 2 million customers in a combined digital platform would provide opportunities for synergies and cross-selling of services," KCL CEO Loh Chin Hua said in September.

"Notwithstanding the challenges currently facing the industry, we see considerable potential in M1 and have developed a transformation plan to sharpen M1's competitiveness."

M1 in July said it had lost 80,000 customers over the past year, with CEO Karen Kooi at the time pointing to 5G trials and narrowband Internet of Things (NB-IoT) network as evidence of the telco's leading position.

"M1 is committed to stay at the forefront of technology advancements, and has embarked on early multi-vendor 5G trials, including Singapore's first end-to-end 5G live trial in June 2018," Kooi said.

"This could provide insightful learning crucial to the successful development of relevant 5G services. With our foundation of dense cell grid and advanced narrowband Internet of Things network, we are well positioned to harness exciting new capabilities and support highly reliable and responsive applications on our network."

M1 had in June announced that it will be trialling 5G small cells in partnership with Nokia at the end of this year across its 4.5G NB-IoT heterogeneous network (HetNet), which was rolled out using Nokia's Flexi Zone Wi-Fi equipment and small cells and was labelled a precursor for 5G.

The telco had also announced in June that it was working with Chinese networking giant Huawei to complete an end-to-end live broadcast of virtual reality (VR) content over a 5G network.

The trial with Huawei, which made use of the 28GHz millimetre-wave (mmWave) spectrum band, took place at the end of June and constituted the first live end-to-end 5G trial of Huawei's equipment in Singapore in that frequency band.

Huawei and M1 are planning to conduct a non-standalone 5G field trial by the end of this year using the 3.5GHz band, and then a standalone 3GPP standards-compliant trial using both 28GHz and 3.5GHz bands in mid-2019.

The two had announced attaining speeds of 35Gbps during a trial of 5G network technology in January 2017.

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