5 Quick Things Investors Should Learn About M1 Ltd’s Latest Second-Quarter Earnings

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

There may be useful and important information that investors can learn from the webcasts and transcripts.

Last week, M1 released its fiscal second-quarter earnings (for the three months ended 30 June 2016). I had spent time going through the transcript of the company’s earnings conference call and came away with five things that may be important for investors to note.

But first, here’s a quick background on M1. The company is the smallest among the big trio in Singapore’s telecommunications industry – in second place is StarHub Ltd (SGX: CC3) and in first is Singapore Telecommunications Limited (SGX: Z74). M1 has four main business segments: mobile services, fixed services, international services, and handset sales. The first three are collectively referred to as service revenue.

With that, here are my notes:

  1. Chief Commercial Officer Lee Kok Chew kicked off the meeting with a few highlights. Lee said that both service revenue and EBITDA margins were stable. M1’s service revenue benefited from strong growth in fixed services.
  2. Chief Financial Officer Raymond Yeo said that mobile services revenue was 2% lower year-on-year due to lower roaming revenue. International call revenue also declined due to lower retail traffic. Yeo said that fixed services revenue rose 27% on the back of a higher fiber customer base.
  3. Chief Marketing Officer Poopalasingam Subramaniam added more details around mobile postpaid revenue. He said that the average revenue per user (ARPU) was up quarter-on-quarter due to seasonality, but down year-on-year due to the dilutive impact of SIM-only plans and lower roaming revenue. On mobile prepaid revenue, Subramaniam said that sales decreased due to lower voice traffic.
  4. Subramaniam also said that the average postpaid data usage was 3.3 gigabtyes (GB), up from 3.2 GB a year ago. An analyst noted that this was flat compared to the first quarter, in which M1 also recorded 3.3 GB. Subramaniam responded that the usage is seasonally low due to school holidays, but has ticked up in April and May.
  5. Notably, M1 has changed its guidance for net profit after tax for the whole of 2016 from “stable” to “single-digit decline.” Subramaniam said that M1 will be investing in a portfolio of digital solutions. Expenses are incurred upfront, but the investments will provide meaningful contribution in future years.

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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.