M1 – BT

M1 posts 1.2% rise in Q2 profit, adds 57,000 customers

Mobile number portability ‘not as bad as it might have been’, says CEO

MOBILEONE (M1) yesterday reported a slim 1.2 per cent increase in second-quarter net profit to $41.1 million, as it struggled with higher customer costs in a competitive market.

M1, Singapore’s third-ranked telco, is the first of the trio to report results since the introduction of full mobile number portability. StarHub reports on Aug 6 and SingTel on Aug 12.

M1 chief executive Neil Montefiore said portability was a ‘peaceful event’ and not as bad as it might have been. ‘There were nowhere near the problems we saw in markets like Hong Kong,’ he said. M1 is ‘looking at a few thousand customers in July who want to take their numbers with them’.

Earlier this month, the Infocomm Development Authority said about 6,500 mobile subscribers have jumped ship since June 13 when full portability took effect. These ‘switchers’ amount to less than 0.1 per cent of the holders of the country’s six million mobile lines.

The three telcos unleashed fierce marketing tactics ahead of June 13 to hang on to customers. In Q2 ended June 30, M1’s advertising and promotion expenses rose 51.3 per cent quarter on quarter to $5.9 million.

Mr Montefiore said the telco has seen a reduction in acquisition and retention costs in the ‘past week or so’.

M1 has announced an interim dividend of 6.2 cents. In the same period last year, it paid 7.10 cents, consisting of an interim dividend of 2.5 cents plus 4.6 cents via a capital reduction. Q2 earnings per share were 4.6 cents, up 7 per cent.

For the six months ended June, net profit was $79.1 million, down 12.4 per cent from a year earlier, when the result was swelled by a tax adjustment. In Q2, the company added 57,000 customers, giving it a base of 1.6 million. But its market share continued to slip, to 26 per cent from 28.4 per cent a year ago.

Mr Montefiore said the telco is not focused on market share but customer and revenue growth. Q2 operating revenue increased 2.8 per cent to $205.3 million.

All Q2 revenue streams registered growth, except for handset sales which fell 29.8 per cent to $13.9 million due to lower selling prices. International call services was the best performer, up 22.2 per cent to $38 million.

Free cash flow almost doubled to $105.6 million for the first half, mainly due to higher tax a year ago.

On prospects for the rest of the year, M1 said it expects competitive activity to settle down in a quarter or two. It also expects operations to remain stable for the year.

M1 shares closed two cents lower yesterday at $1.92.

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