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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 areas: 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.

What’s the story, morning glory? 

Below are six useful things I had learned from going through the transcript of M1’s fiscal fourth-quarter earnings release:

  1. Chief Commercial Officer Lee Kok Chew talked about new developments in the horizon. He noted that new products and services were increasingly incorporating embedded sensors and connectivity. In mid-December 2015, M1 and Keppel Land launched the M1-Keppel Smart Lives programme at a 622-unit condominium. The programme includes a home security package that comprises of an Internet-of Things (IoT) hub as well as camera, contact, and motion sensors.
  2. Lee also said that the viewing habits of customers were shifting towards on-demand content which typically comes with a lower monthly subscription. The arrival of Netflix’s services in Singapore could be a major driver of this trend. The unbundling of content may also result from this trend.
  3. Responding to a question from an analyst, Chief Executive Officer Karen Kooi said that M1 intends to look at its packages as a whole before announcing any deals with Netflix. M1 does not appear to have any concrete plan at the moment.
  4. Speaking of threats, Chief Financial Officer Raymond Yeo said that SMS made up under 10% of M1’s service revenue. The rise of mobile apps like Whatsapp may further hamper SMS revenue in the future.
  5. M1 was also questioned on its 2015 dividend policy. Kooi said that the board felt that an 80% payout ratio was appropriate. The uncertain economic outlook, upcoming spectrum auction, and investments needed guided its decision.
  6. Kooi also added her comments on the debt levels at M1. She said that the telco was comfortable operating at a range of 1 to 1.5 times net debt to EBITDA (earnings before interest, taxes, depreciation and amortisation). M1 ended 2015 with a net debt to EBITDA ratio of 1.0.

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 management teams. It can also help an investor 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 owns shares in Netflix.