M1 – BT

M1 Q4 earnings inch up to $37.5m

Full-year dividend payout of 17.5cents is highest since 2006

M1’s fourth-quarter profit inched up 0.7 per cent to $37.5 million, from $37.2 million a year earlier as higher handset subsidies continued to erode its bottom line. However, shareholders should have no reason to complain as M1 is rewarding them with its highest dividend windfall since 2006 on the back of sustained profitability.

Earnings per share at Singapore’s smallest mobile phone operator stayed flat at 4.2 cents for the three months ended Dec 31, 2010. Revenue climbed 20.9 per cent to $261.4 million for the period.

For its full 2010 financial year, net profit rose 4.5 per cent to $157.1 million, while sales grew 25.3 per cent to $979.2 million.

The company has proposed a final dividend of 7.7 cents per share and a special dividend of 3.5 cents per share.

This takes M1’s full-year payout to 17.5 cents, or 100 per cent of net profit, its highest in the last four years.

‘We have been very disciplined in our deployment of cash and built up a very strong track record of capital distribution to shareholders,’ said M1 CEO Karen Kooi.

‘With our proposed final and special dividend, our total dividend yield for 2010 will be about 7 per cent,’ she said at the group’s results briefing yesterday.

In 2010, M1’s bottom line was up slightly as operating expenses climbed 30.5 per cent year on year to $785.2 million. Soaring handset subsidies were the main culprit as they caused M1’s cost of sales to spike 50.6 per cent to $492.2 million.

Last year, all three local telcos were plagued by the same issue of rising costs as Singaporeans continue to snap up feature-rich handsets such as the iPhone. Operators typically offer heavier upfront subsidies for these phones and try to recoup the investment over the subscriber’s contract.

At M1, more than 90 per cent of the handsets that it sells are smart phones and some 55 per cent of its post-paid subscriber base is using these devices, said Ms Kooi.

In 2010, M1 added 89,000 new post-paid mobile subscribers, compared with 30,000 in the preceding year, to take its total handset user base to 1.91 million.

For the current year, the firm plans to ramp up its fibre-optic service offerings as Singapore’s Next Generation Nationwide Broadband Network continues to gather steam.

The company will also upgrade its cellular infrastructure by investing in a technology called LTE to allow for higher mobile data speeds.

‘Based on the current outlook and barring any unforeseen circumstances, we are likely to see improved net profit after tax for the year 2011,’ Ms Kooi said, adding that the firm’s dividend policy would remain at 80 per cent of post-tax profits.

M1 shares closed one cent higher at $2.50 yesterday before its Q4 and full-year earnings were released.

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