Category: M1
M1 – CIMB
A quad-play operator now
M1 launches pay-TV service
Maintain Outperform. M1’s new pay-TV service, while positive, is unlikely to be a game-changer for the company given the limited content on offer. Nevertheless, we are positive on the service as it would complete M1’s quad-play offering, provide some ARPU uplift and serve as a retention tool. The earnings impact is not expected to be big in the near term, and we retain our FY10-12 earnings forecasts along with our DCF-based target price of S$2.65 (WACC 8.5%). We continue to see catalysts from capital-management potential, upside from NGNBN and the news that it is now a quad-play operator. M1 remains our top pick in the sector.
The news
M1 will be launching its pay-TV service today where it will be offering niche content in education, music, movies and games etc. The service will only be available to existing M1 broadband customers on either the ADSL or fibre service as a value-added service and would be delivered over the Internet. The content will be offered on a monthly subscription basis except for movies which are payable per view. Customers would have to rent a set-top box for S$5/month or S$12/month depending on the broadband plans they are on. They would be able to receive the programmes by linking hardware to their TV and broadband connections, can use the set-top box to surf the Internet on TV, and play back videos and photos on the big screen as well. In addition to set-top box rental, they would be charged for the programmes on an à-lacarte basis.
Comments
Not a surprise but positive. We are not entirely surprised as M1 has long hinted at its intention to offer a niche IPTV service with the advent of NGNBN. We take a positive view as the service would: 1) enable M1 to become a quad-play telco; 2) increase stickiness among its subscribers; 3) lift M1’s broadband ARPU; and 4) attract customers as the programmes are offered on an à-la-carte basis similar to SingTel’s mio-TV.
Not groundbreaking. While we view the news positively, we do not see this development as groundbreaking. The success of a pay-TV business depends on the content offered, and M1’s content is rather niche and limited. SingTel’s IPTV service did not gain much traction even with video-on-demand, serials and some sports offerings but only took off in a meaningful way when it had secured more compelling
content such as the Barclays Premier League, though at a heavy price.
More niche strategy. Given M1’s smaller balance sheet and lower financial resources relative to the two incumbents, M1 is unlikely to bid for premier content. This could hamper its pay-TV aspirations. Nevertheless, we believe the cross-carriage ruling which mandates content-sharing by operators would favour M1 in the long run.
Valuation and recommendation
Maintain OUTPERFORM; still our top pick. While we are positive on this development, it is unlikely to be a game changer given the niche content on offer and the limited impact on M1’s earnings in the near term. We leave our FY10-12 numbers intact along with our DCF-based target price of S$2.65 (WACC 8.5%). M1 remains our top pick in the sector. We continue to see catalysts from capital-management
potential, upside from NGNBN and the news that it is now a quad-play operator.
M1 – CIMB
A quad-play operator now
M1 launches pay-TV service
Maintain Outperform. M1’s new pay-TV service, while positive, is unlikely to be a game-changer for the company given the limited content on offer. Nevertheless, we are positive on the service as it would complete M1’s quad-play offering, provide some ARPU uplift and serve as a retention tool. The earnings impact is not expected to be big in the near term, and we retain our FY10-12 earnings forecasts along with our DCF-based target price of S$2.65 (WACC 8.5%). We continue to see catalysts from capital-management potential, upside from NGNBN and the news that it is now a quad-play operator. M1 remains our top pick in the sector.
The news
M1 will be launching its pay-TV service today where it will be offering niche content in education, music, movies and games etc. The service will only be available to existing M1 broadband customers on either the ADSL or fibre service as a value-added service and would be delivered over the Internet. The content will be offered on a monthly subscription basis except for movies which are payable per view. Customers would have to rent a set-top box for S$5/month or S$12/month depending on the broadband plans they are on. They would be able to receive the programmes by linking hardware to their TV and broadband connections, can use the set-top box to surf the Internet on TV, and play back videos and photos on the big screen as well. In addition to set-top box rental, they would be charged for the programmes on an à-lacarte basis.
Comments
Not a surprise but positive. We are not entirely surprised as M1 has long hinted at its intention to offer a niche IPTV service with the advent of NGNBN. We take a positive view as the service would: 1) enable M1 to become a quad-play telco; 2) increase stickiness among its subscribers; 3) lift M1’s broadband ARPU; and 4) attract customers as the programmes are offered on an à-la-carte basis similar to SingTel’s mio-TV.
Not groundbreaking. While we view the news positively, we do not see this development as groundbreaking. The success of a pay-TV business depends on the content offered, and M1’s content is rather niche and limited. SingTel’s IPTV service did not gain much traction even with video-on-demand, serials and some sports offerings but only took off in a meaningful way when it had secured more compelling
content such as the Barclays Premier League, though at a heavy price.
More niche strategy. Given M1’s smaller balance sheet and lower financial resources relative to the two incumbents, M1 is unlikely to bid for premier content. This could hamper its pay-TV aspirations. Nevertheless, we believe the cross-carriage ruling which mandates content-sharing by operators would favour M1 in the long run.
Valuation and recommendation
Maintain OUTPERFORM; still our top pick. While we are positive on this development, it is unlikely to be a game changer given the niche content on offer and the limited impact on M1’s earnings in the near term. We leave our FY10-12 numbers intact along with our DCF-based target price of S$2.65 (WACC 8.5%). M1 remains our top pick in the sector. We continue to see catalysts from capital-management
potential, upside from NGNBN and the news that it is now a quad-play operator.
M1 – BT
M1 finally tunes in to pay-TV
Telco now ready to battle rivals SingTel and StarHub across all market segments
Singapore’s telecommunications trinity will compete head to head in mobile, broadband and television services for the first time in local history as M1 finally makes its long -prophesised foray into the pay-TV market.
From today, Singapore’s smallest operator will offer a range of low-cost educational programmes, music shows and movies to local consumers through a new service called 1box, plugging what is seen by many to be the final gap in its business portfolio.
For years, industry watchers have repeatedly highlighted the need for M1 to diversify as it has little room to manoeuvre in light of Singapore’s sky-high mobile adoption.
A quad-play telco, which has its business spread across voice, broadband, fixed line and pay-television segments, is seen by many analysts as the way forward.
‘This (pay-TV) would complete the quad-play proposition, allowing them (M1) to capitalise on the complete NGNBN (Next-Generation Nationwide Broadband Network) product suite,’ said Jeffrey Tan, a regional telecommunications analyst with OSK Research.
Like rival Singapore Telecommunications, M1’s pay-TV content is delivered via an Internet-based network to a customer’s television screen. What sets the two apart, however, is the fact that M1’s programmes are only available to those who subscribe to its broadband services.
The company is touting 1Box as a ‘value-added service’ for customers who are already using its cable, ADSL (asymmetric digital subscriber line) or fiber-optic Internet plans.
M1 is the last telco to join the broadband game here, having launched its Internet services only in 2008, courtesy of an infrastructure tie-up with StarHub. Since then, it has repeatedly hinted that a nice pay-TV offering could be next on the cards.
In September this year, it started rolling out high-speed fiber-optic access through the government-backed NGNBN network when it became partly operational.
‘It (1box) will enable customers to get more out of their current M1 home broadband service,’ P Subramaniam, the company’s chief marketing officer, said in a statement.
To receive the content, consumers will have to rent a set-top from M1 at $5 or $12 monthly, depending on the broadband plan they are currently on.
Users will be able to receive M1’s programmes by linking new hardware to their televisions and broadband connections. Beyond streaming videos, subscribers can even use the new set-top to surf the Web on their TV and playback photos and family videos on a big screen.
In addition to the set-top rental cost, consumers will be charged for the programmes they view on an ala carte basis.
Educational content, which include shows for learning Chinese, maths and science, are offered at $2.14 monthly per channel. Music programmes featuring recordings of ‘live’ concerts are available for $5.95 per month, while movies are offered on a pay-per-view basis at prices ranging from $3.21 to $5.35.
‘Internet on a wide screen is indirectly the killer application (for 1box). Ala carte pricing means greater flexibility for customers, where a new market can be created,’ Mr Tan told BT.
‘They (M1) are trying very hard to increase stickiness and the ability to cross-sell,’ added OCBC Investment Research analyst Carey Wong.
While its low-cost, flexible pricing could be a draw for some, M1’s pay-TV foray is unlikely to ruffle the feathers of incumbents StarHub and SingTel.
SingTel’s mio TV service only took off in a big way last year after it paid premium to pry the Barclays Premier League broadcast rights away from StarHub. However, M1 lacks the financial clout to pull off a coup of this scale and so it has to go with a niche approach, Mr Wong said.
‘They (M1) have to make do with what limited resources they have. Most of the good content is now locked in,’ he explained, adding that the need for an additional set-top could be a further put-off for some consumers.
M1 – BT
M1 finally tunes in to pay-TV
Telco now ready to battle rivals SingTel and StarHub across all market segments
Singapore’s telecommunications trinity will compete head to head in mobile, broadband and television services for the first time in local history as M1 finally makes its long -prophesised foray into the pay-TV market.
From today, Singapore’s smallest operator will offer a range of low-cost educational programmes, music shows and movies to local consumers through a new service called 1box, plugging what is seen by many to be the final gap in its business portfolio.
For years, industry watchers have repeatedly highlighted the need for M1 to diversify as it has little room to manoeuvre in light of Singapore’s sky-high mobile adoption.
A quad-play telco, which has its business spread across voice, broadband, fixed line and pay-television segments, is seen by many analysts as the way forward.
‘This (pay-TV) would complete the quad-play proposition, allowing them (M1) to capitalise on the complete NGNBN (Next-Generation Nationwide Broadband Network) product suite,’ said Jeffrey Tan, a regional telecommunications analyst with OSK Research.
Like rival Singapore Telecommunications, M1’s pay-TV content is delivered via an Internet-based network to a customer’s television screen. What sets the two apart, however, is the fact that M1’s programmes are only available to those who subscribe to its broadband services.
The company is touting 1Box as a ‘value-added service’ for customers who are already using its cable, ADSL (asymmetric digital subscriber line) or fiber-optic Internet plans.
M1 is the last telco to join the broadband game here, having launched its Internet services only in 2008, courtesy of an infrastructure tie-up with StarHub. Since then, it has repeatedly hinted that a nice pay-TV offering could be next on the cards.
In September this year, it started rolling out high-speed fiber-optic access through the government-backed NGNBN network when it became partly operational.
‘It (1box) will enable customers to get more out of their current M1 home broadband service,’ P Subramaniam, the company’s chief marketing officer, said in a statement.
To receive the content, consumers will have to rent a set-top from M1 at $5 or $12 monthly, depending on the broadband plan they are currently on.
Users will be able to receive M1’s programmes by linking new hardware to their televisions and broadband connections. Beyond streaming videos, subscribers can even use the new set-top to surf the Web on their TV and playback photos and family videos on a big screen.
In addition to the set-top rental cost, consumers will be charged for the programmes they view on an ala carte basis.
Educational content, which include shows for learning Chinese, maths and science, are offered at $2.14 monthly per channel. Music programmes featuring recordings of ‘live’ concerts are available for $5.95 per month, while movies are offered on a pay-per-view basis at prices ranging from $3.21 to $5.35.
‘Internet on a wide screen is indirectly the killer application (for 1box). Ala carte pricing means greater flexibility for customers, where a new market can be created,’ Mr Tan told BT.
‘They (M1) are trying very hard to increase stickiness and the ability to cross-sell,’ added OCBC Investment Research analyst Carey Wong.
While its low-cost, flexible pricing could be a draw for some, M1’s pay-TV foray is unlikely to ruffle the feathers of incumbents StarHub and SingTel.
SingTel’s mio TV service only took off in a big way last year after it paid premium to pry the Barclays Premier League broadcast rights away from StarHub. However, M1 lacks the financial clout to pull off a coup of this scale and so it has to go with a niche approach, Mr Wong said.
‘They (M1) have to make do with what limited resources they have. Most of the good content is now locked in,’ he explained, adding that the need for an additional set-top could be a further put-off for some consumers.
TELCOs – BT
Telcos may have to disclose actual broadband speeds
IDA is also proposing they not be allowed to block legitimate content and services
CONSUMERS could get a better idea of the real Internet broadband speeds they are paying for, instead of the maximum speeds advertised by service providers.
The Infocomm Development Authority of Singapore (IDA) issued a consultation paper yesterday seeking feedback on new policy recommendations it plans to put in place. And one recommendation is a new requirement for telcos to disclose real or average speeds consumers can expect with their broadband plans. While telcos typically advertise theoretical maximum speeds, these are rarely achievable due to various factors such as network congestion and peak consumer traffic times.
IDA said it aims to improve transparency so consumers can make informed choices about Internet services. The regulator also said: ‘(The recommendations) seek to protect consumer interests by ensuring that fierce competition in the market does not lead to Internet service providers (ISPs) or telecom network operators degrading the Internet access service quality to end-users, in their bid to compete on price or to lower cost.’
Telcos are also not to block legitimate content and services, said IDA. For example, they will not be able to block voice over Internet protocol (VoIP) applications such as Skype, which might cannibalise their voice revenues.
IDA is, however, allowing ISPs to throttle or slow down such services to manage service-level quality across their users, but they must disclose any such moves to consumers. ISPs are also allowed to provide premium-tier services – for example, a dedicated line for streaming video or other such bandwidth-intensive applications.
Once finalised, the recommendations will be made either as part of a directive to telcos here or included in legislation. IDA has not spelled out how prominently service providers will have to disclose their quality of service (QoS) levels.
The new policies will likely cover mobile broadband providers as well as the new players that will accompany the debut of the Next Generation Nationwide Broadband Network.
IDA already monitors fixed-line broadband QoS service levels and has a minimum set of availability and latency requirements for telcos to meet.
SingTel and StarHub said they will review the consultation paper and submit responses. The closing date for views and comments to be submitted to IDA is Dec 16.