6 Quick Things Investors Should Learn About M1 Ltd

M1 Ltd (SGX: B2F) is one of the cool companies in Singapore that shares webcasts and/or transcripts of their earnings presentations (the link for M1 is here).

As the smallest among the big trio in Singapore’s telecommunications industry – the others being Singapore Telecommunications Limited (SGX: Z74) and StarHub Ltd (SGX: CC3) – M1 makes its money through four business segments, namely, mobile services, fixed services, international services, and handset sales. The first three are collectively known as M1’s services revenue.

You can read more about M1 in here.

Stalling revenue?

Below are six useful things I learned from listening to M1’s fiscal third-quarter earnings webcast:

  1. As mentioned in my recap of M1’s earnings for the quarter,  the fixed services segment saw a 22% year-on-year increase in revenue. Poopalasingam Subra, M1’s Chief Marketing Officer, added that new corporate fiber lines are helping the segment’s average revenue per user (ARPU) grow.
  2. One analyst hypothesized that M1 had issued a minor downgrade on its profit, by adjusting its guidance from moderate growth to single digit growth. When asked for the reason, Chief Commercial Officer Lee Kok Chew said that the guidance change was about being more specific. He added that it is also a reflection of what M1 is seeing after completing three-quarters of the fiscal year. Notably, Singtel had also downgraded its revenue growth in its most recent quarter.
  3. M1’s management team was also challenged on its competitive positioning, in view of a potential fourth telco entering the market. Lee said that competition is not new. Chief Executive Officer Karen Kooi added that M1’s service has always been based on the provision of the best quality network and the best customer experience. Kooi cited the M1 Data Passport (a service that allows usage of local data bundle for overseas roaming) as an example of the company’s customer-focus.
  4. Subra added his view around the M1 Data Passport. M1 has rolled out the service to eleven countries, but it is still in the awareness building stage. Kooi added that it is better to measure progress over one year of operation so as to take seasonality (think usage during holidays) into consideration.
  5. M1’s mySIM plan is also picking up completely new customers. The service offers a SIM-only plan without any handset included. Lee added that this appeals to users who prefer to buy their own smartphones. Kooi also said that the mySIM plan is ARPU-dilutive, but the overall impact will be positive due to lower cost.
  6. M1 was also challenged on its dividend policy. One analyst questioned M1’s reasoning for paying out more than 80% of its profits. Kooi clarified that the company’s dividend policy is to pay out at least 80% of its net profits after tax as dividends.

Foolish takeaway

To buy and hold a company’s shares for the long term also means the need to keep up with developments in the firm.

The access to management teams via webcasts and transcripts gives the Foolish investor a fair chance to judge for themselves whether they would like to be invested alongside those teams. It also helps us put together a more complete thesis around a company and keep up with developments in its industry.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Chin Hui Leong doesn’t own shares in any companies mentioned.