M1 – BT

M1’s Q1 profit down 23.5% at $38m

STRUGGLING to stem its market share decline, MobileOne yesterday posted a first-quarter net profit of $38 million, 23.5 per cent down due to a tax adjustment.

M1, the smallest of the three listed telcos here, said that pre-tax profit rose 2.6 per cent to $46.8 million for the three months ended March 31. It said that net profit was lower at $38 million because the previous corresponding quarter benefited from a two percentage point cut in corporate tax rate to 18 per cent.

According to a poll by Bloomberg, the median profit estimate of three analysts was $40.5 million.

Earnings per share came to 4.3 cents, 14 per cent down from five cents previously.

Although M1 showed growth in sales and added more customers, it came with higher costs while market share continued to slide. At end-February, market share came to 26.5 per cent, down from 27.4 per cent at end-November and 28.9 per cent at end-February last year

M1 said that operating revenue grew 3.8 per cent to $203.9 million, driven by an increase in service revenue. Post-paid revenue edged up 4.9 per cent to $136 million, while prepaid revenue climbed 14.4 per cent to $17.1 million. International call revenue rose 8 per cent to $33.7 million as total international retail minutes increased 83.6 per cent to 112 million.

Handset sales continued to fall, down 16.2 per cent at $17.1 million as M1 cut prices. Operating expenses rose 3.7 per cent to $155.3 million while cost of sales was up 2 per cent at $77.1 million. Free cash flow fell 6 per cent to $59.5 million.

This year will be a kind of watershed for mobile phone players because full mobile number portability starts on June 13. M1 and StarHub, the No 2 player, are expected to launch major campaigns to make inroads into the much bigger customer base of Singapore Telecommunications.

Neil Montefiore, M1 chief executive officer, said: ‘We expect the introduction of full mobile number portability in June will provide us an opportunity to target specific market segments but it may also result in a temporary increase in retention and acquisition costs. Overall, the company foresees its operations to remain stable for 2008.’

Separately, M1 said that it has picked Huawei Technologies to expand and upgrade its Singapore network.

The M1 counter closed two cents down at $1.93 yesterday on volume of 1.22 million shares.

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