M1 Ltd’s Latest Quarter: 4 Quotes from Management to Sum Up Its Mobile Services Business

M1 Ltd (SGX: B2F) released its 2017 first quarter earnings in April. It also hosted an earnings presentation.

M1 has four business segments, namely, handset sales, fixed services, international call services, and mobile services. The last three make up its services revenue. Let’s take a look at what M1’s management shared about the mobile services segment during the earnings presentation.

Gloomy clouds

In the first quarter of 2017, M1’s services revenue made up 77% of the company’s total revenue. In turn, the mobile services segment accounted for over 78% of the company’s services revenue. So, it’s clear that mobile services is by far the most important business in M1’s stable.

The mobile segment consists of postpaid mobile and prepaid mobile.

Source: M1’s earnings presentation

With reference to the chart above, M1’s chief marketing officer, Poopalasingam Subramaniam, said:

“…. for first quarter 2017, our postpaid customer base grew by 24,000 quarter-on-quarter to [1.27 million], driven by the take-up of SIM-only plans. In addition, Circles.Life contributed to the increase in postpaid customers. Prepaid customer base grew 3,000 quarter-on-quarter to 775,000.”

M1 saw growth in the number of postpaid and prepaid subscribers., which is M1’s mobile virtual network operator (MVNO) partner, contributed to the increase in the postpaid subscribers.

However, the postpaid average revenue per user (ARPU) was down on both a year-on-year and quarter-on-quarter basis. Subramaniam shared:

“Postpaid ARPU for first quarter decreased 2.3% quarter-on-quarter, to $55.80, due to the dilutive effect of SIM-only plans and lower roaming revenue. On the whole, SIM-only plans are value accretive, as we see a larger contribution from new customers taking these plans.”

Taken together, M1’s postpaid mobile revenue for the first quarter of 2017 was down 1.7% year-on-year to $142 million. It’s worth noting that the postpaid revenue accounted for the bulk of M1’s mobile services revenue.

Now, let’s move on to the prepaid side.

Source: M1’s earnings presentation

Much like the ARPU for the postpaid business, M1’s prepaid ARPU was also down for the first quarter of 2017 on both a year-on-year and quarter-on-quarter basis. Subramaniam said:

“… prepaid ARPU for the quarter decreased to $11 million.

Our prepaid product propositions have been enhanced with the launch of M1 Remit, a digital remittance service and prepaid data passport for roaming. We will continue to strengthen our services and tariffs, in addition to distribution of cards in top-ups on digital and traditional channels.”

M1 is adding services to its prepaid mobile offering, but as it stands, revenue from prepaid mobile fell 17.8% to $15 million in the reporting quarter. To round it off, Subramaniam added:

“… postpaid market share was 24.8% and prepaid market share was 22.5%.”

On the bright side, M1 managed to keep both its postpaid and prepaid market shares stable compared to the previous sequential quarter.

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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.