M1 (formerly: MobileOne)

[Dividend Warrior]

M1’s full-year earnings up 9.7% to $176 million; declares 11.9 cents final dividend

SINGAPORE (Jan 19): M1 Limited ( Financial Dashboard) said FY14 earnings rose 9.7% to $175.8 million, or 18.8 cents per share, from $160 million a year ago, on higher revenues and better margins.

On a quarterly basis, 4Q earnings edged up just 0.1% y-o-y to $45 million on a 38.4% increase in revenue to $346 million.

For the full year, operating revenue increased 6.8% to $1.08 billion from $1.01 billion a year Service revenue grew 1.4% to $831 million, driven by growth in postpaid and fixed customer base, as well as higher revenue from mobile data.

Mobile telecommunications revenue grew 4.2% to $671.1 million, due to higher postpaid revenue. Mobile data usage continued to grow, with revenue from non-voice services for FY2014 increasing 5.7 percentage points to 47.3% of service revenue from last year.

As at end 2014, total mobile customers base was 1.85 million. Postpaid customer base increased 19,000 y-o-y to 1.15 million, while prepaid customer base was impacted by the regulatory change.

During the year, fibre customer base grew 18,000 to 103,000.

The board of directors has recommended a final dividend of 11.9 cents per share, taking full-year payout to a total of 18.9 cents per share.

M1 said it expects moderate growth in FY2015 net profit tax and capex to be around $120 million.

The stock closed 1.1% higher at $3.62.
http://www.theedgemarkets.com/sg/article...l-dividend

The commitment of the management to give a higher final dividend instead of a 'final + special' is a good sign. This shows that they are confident of at least maintaining it.

Vested

[thor666]

Reading the details, m1 turned higher profits but burnt through their cash, losing market share on the mobile front. I haven't analyzed in detail, the cash drop could be due to their investment costs in new DC.

Remains to be seen for the long run.. At least another year is needed to know whether they will turn the negatives around.

(IPT )

Sent from my D5503 using Tapatalk

[axt]

Under the Cash Flows Statement within investment activities, there is a "Purchases/sales of spectrum rights" of $40.1m, anyone know what is this?

[CityFarmer]

Reading the details, m1 turned higher profits but burnt through their cash, losing market share on the mobile front. I haven't analyzed in detail, the cash drop could be due to their investment costs in new DC.

Remains to be seen for the long run.. At least another year is needed to know whether they will turn the negatives around.

(IPT )

Sent from my D5503 using Tapatalk

M1's FCF has been consistently positive and significant since listing. I do agree M1 has "burnt" its cash regularly by maximizing distribution to shareholders, in a mean of dividends.

In FY2014, the dividend paid was approx S$197 million, comparing with previous year of S$136 million.

M1 has lost overall mobile market share, but maintained its share on post-paid market. Post-paid has much higher margin, and it is the market where data revenue derived.

(vested)

[CityFarmer]

Under the Cash Flows Statement within investment activities, there is a "Purchases/sales of spectrum rights" of $40.1m, anyone know what is this?

It is the licensing renewal of spectrum usage of mobile network, as stated by the description.

[wee]

Hi CF,

do you have any concerns that M1 is running at -ve current assets?

[CityFarmer]

Hi CF,

do you have any concerns that M1 is running at -ve current assets?

I assume you means current ratio <1.

It is always worth to find out more when current ration <1. Anyway, the current ratio isn't too far away from 1. I don't have serious concern on M1's current ratio, after taken consideration of its business model.

Starhub/SingTel are having similar ratios, thus it might be a norm of telco business.

(vested)

[wee]

Yes, current ratio.

Their cashflow is probably more predictable since a lot of customers are on long term contracts. This allows them to run a tighter ship.

I assume you means current ratio <1.

It is always worth to find out more when current ration <1. Anyway, the current ratio isn't too far away from 1. I don't have serious concern on M1's current ratio, after taken consideration of its business model.

Starhub/SingTel are having similar ratios, thus it might be a norm of telco business.

(vested)

[CityFarmer]

An old yet relevant IDC report. The report was on Malaysia market, but applicable to Singapore too, IMO.

Singapore telcos might hit that earlier. For M1, the ratio of non-voice service as % of service revenue, is approaching 50% in FY2014. I reckon M1's non-voice revenue will overtake voice revenue in FY2015, which is two years earlier than M'sia counterparts, as predicted by IDC

(vested)

Mobile Data Services Set To Overtake Mobile Voice in Malaysia by 2017, Says IDC

22 Jul 2014
MALAYSIA, Kuala Lumpur, July 22, 2014 – Mobile data services will become the key driver for mobile operators in Malaysia and is expected to surpass mobile voice revenue in 2017, according to International Data Corporation (IDC) Mobile Service Tracker 2H 2013.

Despite the penetration rate of Malaysian mobile users exceeding 140% and high prepaid-postpaid ratio, mobile operators have still been able to maintain their revenue growth. Total revenue has grown by 35% in the last three years, and IDC expects the revenue to continue to grow to RM27.6 billion in 2018 at Compound Annual Growth Rate (CAGR) of 2.6%.

"Mobile data revenue will continue to grow strongly at CAGR of 8.5% and become the main driver of the total mobile revenue in the next five years,” says Alfie Amir, Research Manager, Telecommunications, IDC Malaysia.

“Mobile operators need to be proactive to the market trend by leveraging emerging technologies such as Internet of Things (IoT), Big Data, Social and Cloud, in order to continue to grow and stay competitive. Mobile operators may also need to revisit their spectrum strategy in order to maximize network capacity and enhance user experience," adds Amir.

IDC has identified three key areas that drive mobile data revenue in the next five years:


Mobile data users – Will grow at a strong CAGR of 11%, from only 57% out of total mobile subscribers in 2013 to 89% in 2018. The growth is mainly driven by the increase of low-tier smart devices and affordability of data packages.


Media contents – In line with the increase in device capabilities, media contents are getting richer and larger in terms of bandwidth. More media contents will be shared and downloaded due to the increase of Over-The-Top Player (OTTP) and social media. This will drive data demand hence higher data package will be required. OTTP has been a major challenge for mobile operators as it is competing with mobile operators' traditional services and turning the network into dumb pipes. However there are cases where mobile operators could consider revenue-sharing partnerships with OTTP.


4G LTE – Four operators have launched LTE services as natural upgrades to their existing data packages without any premium charges. LTE subscribers have higher average revenue per user (ARPU) than 3G subscribers due to the higher data usage. This has been shown in countries with developed market such as Japan and South Korea. IDC predicts LTE subscribers in Malaysia to grow solidly from 265,000 in 2013 to 7.6 million in 2018. Higher speed and lower latency of LTE will enhance user experience, hence retaining existing users and attracting new users from competitors.


In countries with mature market such as Australia and South Korea, mobile data revenue has surpassed mobile voice and became the main driver of the total revenue. In Malaysia, although mobile data revenue is growing steadily, mobile voice still accounts to 60% of total revenue.

IDC predicts mobile data revenue in Malaysia is expected to surpass mobile voice in 2017.
http://www.idc.com/getdoc.jsp?containerId=prMY25004314

[CityFarmer]

I concur with the analyst report. M1 has the cleanest position with fixed broadband business. M1 is the most operationally efficient, measured by EBITDA margin. The capital management strategy, is also most OPMI friendly, since listed.

(vested)

M1 started at "buy", $4.50 target by Deutsche Bank

SINGAPORE (Feb 24): Deutsche Bank has started coverage on M1 with a "buy" rating and price target of $4.50.

"M1 offers the cleanest exposure to the Singapore mobile market, which we view as attractive compared to fixed-line," Deutsche Bank analyst Srinivas Rao wrote in a note.

"We believe M1 has an opportunity to make modest market-share gains without attracting a strong response from Singtel or Starhub," he said.

The company's profit margins should improve as it has not engaged in aggressive tariff competition or subsidies given that its focus is on generating cash flows instead of quickly gaining market share, he noted, adding that this should bode well for dividend growth and shareholder returns.

"While M1 lacks scale and content to offer a compelling broadband proposition by leveraging the national broadband network, it has not been a competitive disadvantage.

"The broadband segment remains very competitive and hence we are positive on M1’s calibrated approach."

While the industry regulator is keen to bring in another mobile operator, the probability is low, said Rao.

"It would be challenging for a viable fourth operator to provide adequate spectrum and a well-balanced incentive and regulatory framework."

M1 shares fell 0.3% to $3.90 at 12:02pm (0402 GMT).
http://www.theedgemarkets.com/sg/article...tsche-bank