M1 – BT

M1 profit up 8.2% to $42.5m in Q1

M1’s first-quarter net profit climbed 8.2 per cent to $42.5 million, from $39.3 million last year, as the burden of heavy handset subsidies starts to ease this year.

Earnings per share for the three months ended March 31 came in at 4.7 cents, up from 4.4 cents last year.

First-quarter revenue grew 3.5 per cent to $257.6 million, from $249 million in 2010 due to a combination of higher mobile subscription and handset sales, as well as increased contribution from M1’s broadband business. Revenue from mobile services – which accounts for nearly two-thirds of the firm’s sales – edged up 1.3 per cent to $145.3 million in Q1.

Both postpaid and prepaid segments turned in a better scorecard, with revenue growing 1.3 per cent and 1.8 per cent year-on-year as M1 added 23,000 more mobile customers during the period.

The latest additions took its cellular subscriber base to 1.934 million, an increase of 7.7 per cent from 2010.

Last year, all three local telcos were hit by the smartphone wave as consumers flocked towards so-called smartphones such as the Apple iPhone.

While the gadget fever resulted in higher customer numbers, their bottom lines had to take a short-term hit as these phones came with higher upfront subsidies. However, the bane is now easing with M1’s operating expenses growing a moderate 2.3 per cent in the first quarter to $204.8 million.

In 2010, the firm’s operating expenses climbed a staggering 30.5 per cent largely due to heavy smartphone subsidies.

Revenue from its international calls was almost flat in Q1 at $32.3 million but M1’s broadband diversification continues to pay off with its fixed services revenue climbing 19.2 per cent to $7 million.

‘For 2011, we see exciting opportunities in the fixed segment, driven by enhanced experience on the new fibre network and progressive expansion of its coverage,’ M1 chief executive Karen Kooi said in a statement yesterday. ‘Growth in the mobile segment will be driven by increased adoption of tablets and other mobile broadband devices.’

Looking ahead to the full year, Ms Kooi expects to see an improvement to M1’s bottom line if operating conditions remain stable.

The counter closed two cents lower at $2.41 yesterday.

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