M1 Ltd’s Digital Future: Here Is What Investors Need to Know

Singapore’s smallest telecommunications company M1 Ltd (SGX: B2F) is investing in a portfolio of digital solutions. Here are some important details on what this move entails for the telco.

A digital future

In M1’s 2016 second quarter earnings presentation, the company’s chief commercial officer Lee Kok Chew explained why it is looking at new technologies:

“Increasing adoption of OTT [over the top] services has impacted traditional telecoms revenue, but led to higher demand for data. We are investing in new technologies and capabilities and building up a portfolio of digital solutions to enhance our service proposition and cater to changing customer needs.”

It looks like some of M1’s efforts are starting to take shape.

In September this year, M1 announced partnerships with leading cyber security companies to offer enterprise-grade managed corporate cyber security solutions. These include partnerships with Palo Alto Networks, Proficio, and Red Sentry, a subsidiary of Secura Group Ltd (SGX: 43B).

A connected world

In late October, M1 also conducted Singapore’s first “live” Narrowband Internet of Things (NB-IoT) demo. In its announcement on the demo, the telco discussed how NB-IoT could be used to connect millions of sensors that will be installed nationwide as part of Singapore’s Smart Nation initiative.

In M1’s 2016 third quarter earnings briefing, Lee gave an update on the IoT initiative:

“Last question on IoT applications, right, what we are doing today is that we have achieved — got the IoT platform ready.”

Lee also explained what the IoT opportunity means for M1:

“We are able to allow for customer self service essentially to reduce costs of staff. As you know that such applications are low ARPU but these are of high volume, means at some point that we can look forward to things like ERP tool, we will see SIM cards in every car.”

In the quote just above, Lee talked about the nature of IoT: It will have a lower average revenue per user (ARPU), but will make up for that via high volumes. Lee also said:

“We’re looking at smart metering. We’re talking about 1.2 million households in Singapore and also of course, under Smart Nation initiative there could be opportunities for sensor deployment on a large scale.

So those are the opportunities that we are looking towards when we are talking about this IoT application and so getting ourselves ready and positioned for that.”

In all, M1 is still in the early stages of its IoT and cyber-security ventures. Investors will have to wait and see how these digital efforts turn into sales and profits in the future.

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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.