M1 – BT

M1 chalks up 15.5% jump in Q3 net to $39.5m

Q3 operating revenue soared 30% to $245.7m, from $188.4m last year

HIGHER handset sales and subscription revenue helped lift M1’s third-quarter net profit 15.5 per cent to $39.5 million, from $34.2 million a year earlier.

Earnings per share for the three months ended Sept 30 rose 15.8 per cent to 4.4 cents, from 3.8 cents in 2009.

Q3 operating revenue soared 30.4 per cent to $245.7 million, from $188.4 million last year.

However, M1’s profitability was impacted by the recurring trend of having to absorb higher subsidies for smart phones such as the iPhone 4.

This led to a 34.5 per cent spike in the firm’s operating expenses to $196.6 million during the quarter.

Singapore’s smallest operator turned in a better scorecard across all three business lines in Q3.

Revenue from mobile services, which accounts for more than half its sales, grew 2.2 per cent to $143.9 million.

Besides recurring phone subscriptions, local telcos also received a boost from the launch of Apple’s iPad touchscreen tablet in Q3 with the introduction of new data plans for the device.

Income from international call services, which dipped last year as customers cut back on overseas calling during the recession, grew 0.6 per cent to $32 million in Q3.

Sales from its fixed services, M1’s nascent broadband business, grew to $6.1 million in Q3, from a mere $600,000 a year earlier.

M1 is hoping to ride on the recent launch of Singapore’s fibre-optic broadband highway to drive up this segment’s income in the near future.

Last month, the Republic’s new Internet backbone became partly operational and all three telcos have introduced new ultra high- speed Internet packages for estates that are wired up for breakneck broadband access speeds.

‘This (the launch of the fibre-optic network) represents a major milestone as we continue to grow our fixed-line business,’ M1 CEO Karen Kooi said in a statement yesterday.

Thanks to strict government regulations, M1 can buy bandwidth at the same wholesale pricing as its rivals.

This will allow the firm to compete on an equal footing with entrenched broadband incumbents Singapore Telecommunications and StarHub.

To take advantage of the new regime, M1 said it has even established its own operating company or OpCo to cater specifically to corporate customers.

OpCos lease fibre-optic infrastructure from a company called OpenNet, activates these links, and sells Internet packages to end users such as consumers or businesses.

Having its own OpCo will allow M1 to offer more customised solutions and faster customer response times, the company explained.

For the first nine months of the year, M1 registered a 5.7 per cent increase in net profit to $119.6 million on the back of a 27 per cent increase in operating revenue to $717.8 million.

‘Based on the current outlook, we are maintaining our guidance that net profit after tax for 2010 is likely to improve year-on- year,’ Ms Kooi said.

M1 shares closed one cent higher at $2.25 yesterday before its Q3 earnings were released.

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