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M1's profits hit by handset subsidy costs

Singapore telco experiences 2.4 percent growth in revenue to S$382 million in first half of 2012, but net profit drops by 11.5 percent due to higher handset subsidies.
Written by Kevin Kwang, Contributor

Singapore telco M1 announced on Monday its revenue grew by 2.4 percent to hit S$382 million (US$301.9 million) during the first six months of 2012, but net profits suffered from rising handset subsidies. It also announced that nationwide coverage of its LTE service for both smartphones and dongle modems will be introduced toward the end of the third quarter.

In a statement released today, M1 said growth in its customer base and higher contribution from fixed services helped boost its half-yearly revenue, while free cash flow remained healthy as it increased 38.1 percent on-year to S$85.6 million (US$67.7 million).

The company added 21,000 customers in the second quarter along, bringing its total mobile customer base to 2.04 million as of Jun. 30, 2012. It also has 56,000 fixed services customers, out of which 37,000 are fiber customers, it noted.

The operator's net profit after tax took a tumble though, as it decreased 11.5 percent to S$75.5 million (US$59.7 million) due to higher handset subsidies.

"The strong interest in new high-end smartphones will contribute to revenue growth over the two-year period. The handset subsidies expensed upfront have an immediate impact on profitability though," said Karen Kooi, CEO of M1, in the statement.

Nationwide LTE coming in third quarter
M1 also announced it will be expanding its LTE coverage, currently limited to dongle modems in Singapore's business district, to all parts of the country and for smartphone devices. 

Company spokesperson Petrina Teoh told ZDNet Asia the coverage will be 100 percent and pricing for the postpaid plans will be unveiled toward the end of the third quarter of this year when the service is launched. The telco was the first to introduce LTE in the city-state, and will be the first to offer nationwide coverage should it meet its stated targets.

Rival SingTel also disclosed its LTE plans in June, saying it had 50 percent coverage of "4G service" currently and expects to hit 80 percent by end-2012. Full coverage can be expected by early-2013, said Yuen Kuan Moon, CEO for Consumer Singapore at SingTel.



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