M1 Ltd’s Latest Quarter: 3 Quotes from Management to Sum Up Its Fixed 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 fixed services segment during the earnings presentation.

Small base, big growth

M1’s services revenue accounted for 77% of its total revenue in the first quarter of 2017. In turn, the fixed services segment made up around 15% of the services revenue. So, as you can see, the fixed services segment is not a big part of M1’s business. But, it was the only segment that showed growth in the first quarter of 2017.

Source: M1’s earnings presentation

M1’s chief financial officer and chief commercial officer, Lee Kok Chew, said:

“Revenue from fixed increased 22.8% year-on-year to $30 million, driven by higher customer base and contribution from major government projects.

Our fibre customer base increased 8,000 quarter-on-quarter to 168,000 and fixed revenue grew to 15% of service revenue compared to 12% a year ago.”

In short, the fixed services segment benefited from an increase in its customer base. At the moment, the business segment may be small, but it is growing in influence for M1. Let’s look at the average revenue per user (ARPU) for the segment next.

Source: M1’s earnings presentation

M1’s chief marketing officer, Poopalasingam Subramaniam, said:

“Fibre ARPU for the quarter was $43.40. Quarter-on-quarter, it was slightly higher, mainly due to contribution from the corporate segment.”

ARPU was up 0.7% compared to the previous sequential quarter, but down 7.6% compared to a year ago. Subramaniam said that the corporate side helped the ARPU grow. M1 can look forward to more growth in the fixed services segment, Lee suggests:

“A lot of the projects that we secured at the end of last year, we are seeing the revenue accruing and coming in and you should continue to see that in the subsequent quarters as well.”

As it stands, it appears that investors can look forward to more from M1’s fixed services segment.

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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.