M1 – BT

M1 posts 10% rise in Q2 net profit to $40.6 million

It aims to return 70% of $90.3m H1 net through capital reduction, dividend

MOBILEONE (M1) yesterday reported a 10 per cent year-on-year rise in second-quarter net profit to $40.6 million. This brought its first-half net earnings up 10.3 per cent to $90.3 million, 70 per cent of which the telco has proposed to return to shareholders through a dividend and a capital reduction.

The $40.6 million Q2 net profit translates to earnings per share (EPS) of 4.3 cents, up 16.2 per cent from 3.7 cents a year ago.

In a conference call yesterday evening, M1 chief executive Neil Montefiore attributed the better performance to higher revenues from increased data usage, as well as lower corporate taxes.

Q2 revenue grew 4 per cent to $199.8 million, helped by average revenue per post-paid user rising to $62.20 from $60.40 a year ago. This was driven by an increase in data usage by its post-paid customers, said Mr Montefiore. For H1, revenue rose 3.5 per cent to $396.2 million.

The company also brightened its outlook for the year by raising its profit forecast for the current financial year from stable to single-digit growth.

M1 proposed an interim dividend of 2.5 cents per share, and a cash distribution – by way of a capital reduction without any share cancellation – of 4.6 cents per share. Together, this will amount to 70 per cent of first-half net profit.

Mr Montefiore added that while M1’s wireless broadband service still constitutes a small portion of its customer base, it now has some 42,000 customers on the service, most of whom are on its $38 per month plan.

M1 added some 31,000 subscribers in the quarter, bringing its customer base to 1.409 million subscribers or about 28 per cent of the local market.

M1’s capex was $17.4 million in the first half of the current financial year, up from the $8 million spent in the same period last year. This was largely spent on its wireless broadband devices, said Mr Montefiore.

He added that with the growth seen in data usage, M1 is now evaluating technologies that will enable it to provide more of its own backhaul requirements.

‘Currently, we spend about $30 million per year on leased circuits that are not provided by ourselves,’ he said. This accounts for some 80-90 per cent of its backhaul requirement, most of which is leased from SingTel. M1 intends to reverse this, and by 2010 plans to have 80-90 per cent of its backhaul requirements self-provisioned.

M1 shares closed the day down 3 cents at $2.13. Shares of competitors StarHub lost 4 cents to finish at $2.86, while SingTel ended unchanged at $3.50.

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