M1 third-quarter net profit fell 5.5 percent to S$34.5 million on higher acquisition costs

M1 location in Singapore Geylang neighbourhoodM1 location in Singapore’s Geylang neighbourhood

Singapore telco M1 reported its third-quarter net profit fell 5.5 percent on-year to S$34.5 million on higher acquisition and retention costs.

Operating revenue rose 10.1 percent on-year in the quarter ended 30 September to S$274.6 million on higher fixed services revenue and handset sales, M1 said in a filing to SGX after the market close on Wednesday.

Fixed services revenue rose 25.9 percent on-year to S$37.8 million in the quarter on a higher fiber customer base and contributions from corporate projects, M1 said.

Handset sales increased 34.1 percent on-year to S$84.5 million in the quarter on a higher average selling price and higher sales volume, M1 said.

Operating expenses rose 13.8 percent on-year to S$230.6 million in the third quarter, with the cost of sales rising on higher handset costs and amid expenses for corporate projects, it said. Staff costs rose 4.1 percent on-year in the quarter to S$31.5 million on salary increments and expansion of the corporate team to support the ICT business’ growth, M1 said.

Prepaid customer acquisition cost rose to S$411 in the quarter, up 8.7 percent on-year and 15.8 percent on-quarter, M1 said, adding that for the nine-month period, the cost was S$393, up 5.1 percent on-year.

Postpaid revenue for the quarter rose 1.4 percent on-year and fell 2.4 percent on-quarter to S$129.4 million, while prepaid revenue fell 12.8 percent on-year and fell 2.9 percent on-quarter to S$13.2 million, it said.

ARPU falls

The postpaid net average revenue per user (ARPU) per month was at S$40.80 in the third quarter, down 2.6 percent on-year and down 3.5 percent on-quarter, M1 said.

Prepaid ARPU per month was at S$10.50, down 2.8 percent on-year and flat on-quarter, it said.

Mobile data’s contribution as a percentage of service revenue was at 64.6 percent in the third quarter, compared with 57.3 percent in the year-ago quarter and 64.4 percent in the second quarter, M1 said.

Average postpaid smartphone data usage rose to 5.5GB a month in the third quarter from 4.2GB in the year-ago quarter, it said.

M1’s customer base was at 2.15 million as of 30 September, down 1.8 percent on-year and 0.6 percent on-quarter, it said, adding that its market share was at 23.5 percent at the end of July. Its churn rate was 1.0 percent in the quarter, lower on-year but stable on-quarter, it said.

It added 24,000 post-paid customers in the quarter, bringing its postpaid customer base to 1.36 million as of 30 September, the filing said.

For the nine-month period, M1’s net profit fell 1.4 percent on-year to S$105.5 million, while operating revenue rose 4.1 percent on-year to S$781.9 million, it said.

Outlook

In its outlook, the telco said, “M1 continues its transformation to a smart communications provider to compete in the converged digital
economy.”

It noted that Konnectivity, which is jointly owned by Keppel Corp. and SPH, in September made a pre-conditional voluntary conditional general offer for all of M1’s shares.

Get the Shenton Wire morning briefing in your inbox