M1 – BT
M1 lifts Q2 net profit 10% to $40.8m
Telco’s customer base, operating revenue up; declares higher dividend
THE second-quarter corporate earnings season got off to a good start yesterday, with M1 reporting that its Q2 net profit rose 10 per cent to $40.8 million from a year earlier, as operating revenue improved and its customer base grew.
The telco also raised its dividend slightly, signalling confidence in the business outlook for the rest of the year – a welcome start to the current Singapore corporate earnings season.
M1’s board declared an interim cash dividend of 6.3 cents a share, to be paid in August, up from 6.2 cents a year back.
Its earnings per share rose to 4.5 cents, from 4.1 cents a year earlier.
Compared with Q1, net profit was 3.7 per cent higher, mainly due to lower operating expenses, M1 said after trading ended yesterday. For the first six months of the year, net profit increased to $80.1 million, up 1.5 per cent from the same period last year – or 9.2 per cent if a tax credit adjustment that boosted earnings in the earlier period was excluded.
M1 chief executive Karen Kooi repeated the company’s guidance in April that it expects net profit for the full year to be higher than last year’s.
‘Based on the current outlook, net profit after tax for the year 2010 is likely to improve, compared to 2009,’ she said in a statement yesterday. M1’s share price ended 0.5 per cent higher at $2.16, before its earnings report.
M1 added 180,000 mobile-phone customers over the year, raising its user base 10.8 per cent to 1.849 million at end-June. Its market share at end-May – based on the latest industry statistics – was 26.2 per cent, up from 25.6 per cent at end-June last year.
Mobile services, which account for more than half of the telco’s operating revenue, rose 2.2 per cent over the year to $144.7 million in Q2. Sales to post-paid and pre-paid subscribers grew as M1 acquired more customers, but average revenue per user fell.
Handset sales rose sharply to $40.7 million in the three months to end-June, from $15.6 million a year earlier. Overall, operating revenue for the quarter rose 17.1 per cent year on year to $223.1 million.
M1 is preparing to take full advantage of the commercial opportunities presented by the new nationwide all-fibre network scheduled for launch later this year that will ‘change the current competitive landscape for fixed services’, Ms Kooi said.
Fixed-line services make up just a fraction of M1’s revenue at present – $6.1 million of the company’s $223.1 million in operating revenue in Q2 – but that contribution is likely to rise with the commercial launch of new fibre-optic broadband highway.
This will allow M1 – the smallest of Singapore’s three telcos – to offer fixed-line broadband services to compete with rivals SingTel and StarHub.