M1 – BT

M1 posts 4.1% rise in Q3 profit to $41.1m

Lower operating expenses, lower cost of sales lift earnings

M1 Limited’s third-quarter operating revenue dipped 0.4 per cent to $244.8 million, from $245.7 million a year ago, as weaker handset sales weighed on the topline.

However, net profit for the three months ended Sept 30 climbed 4.1 per cent to $41.1 million from $39.5 million in the prior year.

Earnings per share for the quarter rose 2.3 per cent to 4.5 cents, from 4.4 cents a year earlier.

Lower operating expenses, helped by lower cost of sales, were the key driver in the mobile provider’s higher earnings.

Net margin for the quarter increased 0.7 of a percentage point to 16.8 per cent from 16.1 per cent for the corresponding period last year.

Cost of sales fell 4.7 per cent year-on-year to $118.0 million on the back of lower handset costs, whilst a drop in operating expenses was helped by lower advertising and administrative costs and lower general and administrative expenses.

The smallest local operator also turned in a better report card for two of its three business lines in the third quarter.

Notably, revenue from mobile services, which accounts for more than half of the group’s revenue, grew 2.5 per cent to $147.5 million.

Surging 77.0 per cent, sales from M1’s fixed services segment – its nascent broadband business – broke into the double-digit range, raking in a total of $10.8 million in 3Q11 from $6.1 million in 3Q10.

On the downside, M1’s business segment, internal call services, saw a 5.3 per cent dip in revenue to $30.3 million for 3Q11 due to weaker retail takings.

Handset sales for the season was also 11.6 per cent weaker year-on-year at $56.3 million as compared to $63.7 million in 3Q10 on the back of lower unit selling prices.

On a year-to-date basis, M1’s operating revenue for the nine months ended Sept 30, 2011, went up 4.2 per cent at $747.8 million on the back of higher service revenue and handset sales. Net profit for the first nine months also came in 5.7 per cent higher year-on-year at $126.4 million.

Last month, M1 launched its own active network for the Next Generation Nationwide Broadbank Network (NGNBN) in the hope of lowering its operating cost base.

M1 chief executive officer Karen Kooi shared that this latest initiative would boost M1’s overall service level and competitiveness on top of enhancing its ability to offer customised solutions.

‘Based on the current outlook and barring any unforeseen circumstances, net profit after tax for 2011 is likely to improve, compared to 2010,’ said Ms Kooi.

M1 shares closed one cent lower at $2.48 yesterday.

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