M1 – BT

New M1 chief sees an old pal at StarHub

A known competitor, says Kooi, as she reports 9.7% fall in M1 net profit for Q2

INSTEAD of hurting MobileOne (M1), having its former chief head rival StarHub could be a boon, says the new chief of Singapore’s smallest operator.

‘We are glad we have a friend in Neil (Montefiore), so we know our competition,’ said M1 CEO Karen Kooi, as she chaired the telco’s second-quarter results tele-conference yesterday for the first time as M1’s new head.

Ms Kooi, formerly M1’s chief financial officer, took over the reins from Mr Montefiore in April, after serving two months as the interim steward. Her former mentor will return to the telco scene as CEO of StarHub next January following the retirement of incumbent chief Terry Clontz.

For the three months ended June 30, M1’s net profit slipped 9.7 per cent to $37.1 million from $41.1 million a year earlier, due to a revenue decline across all major businesses.

Q2 operating revenue fell 7.2 per cent to $190.5 million, from $205.3 million in 2008. Earnings per share came in at 4.1 cents, down from 4.6 cents last year.

M1’s post-paid mobile sales continued to head south in Q2, falling 8.5 per cent to $124 million amid competitive pressure from rivals Singapore Telecom and StarHub, as well as its own bundling discounts. The operator’s pre-paid revenue also slid in Q2 – by 2.2 per cent to $17.5 million.

With customers reining in overseas calls amid the economic crunch, revenue from M1’s international call services fell 13.7 per cent in Q2 to $32.8 million.

While business has declined, a silver lining is that M1’s operating costs have also gone down.

Customer acquisition and retention costs fell 15.6 per cent and 10.2 per cent to $151 and $150 respectively in Q2. In the same period last year, a fierce marketing war prior to the launch of full mobile number portability sent marketing and promotional spending to dizzy heights for all three local operators.

M1’s staff costs fell 18.9 per cent in Q2 to $18 million as a result of lower bonus provision and a cut in headcount.

M1 also staunched bleeding on the subscriber front during the quarter. It gained 50,000 subscribers, lifting its customer tally to 1.67 million. Its churn rate (the percentage of customers leaving) improved marginally to 1.5 per cent, from 1.6 per cent in Q1.

M1, which is Singapore’s smallest telco, has announced an interim dividend of 6.2 cents, unchanged from last year. For first-half 2009, net income fell 0.3 per cent to $78.9 million, while revenue slid 7.9 per cent to $376.9 million.

Ms Kooi said: ‘Operating conditions for the rest of the year are likely to remain challenging. Economic recovery is still uncertain and the flu pandemic may affect customer spending.’

However, M1 still expects to retain its policy of paying 80 per cent of net profit as dividends this year. Based on its first-half performance, full-year net profit ‘is likely to be comparable to 2008’, Ms Kooi said.

M1 shares rose one cent to close at $1.61 yesterday before its Q2 results were released. Rivals StarHub and SingTel will report their earnings on Aug 5 and Aug 13 respectively.

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