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M1 Ltd’s Second-Quarter Earnings Briefing: 4 Quotes to Sum Up Its Mobile Services Business  

M1 Ltd (SGX: B2F) hosted its second-quarter earnings briefing in July.

M1 has four business segments, namely handset sales, fixed services, international call services and mobile services. The last three make up its service revenue. Let’s take a closer look at its mobile services segment.

Gloomy clouds

M1’s mobile services segment accounted for over 78% of its services revenue in the second-quarter. Needless to say, mobile services is by far the most important business in the M1 stable.

The mobile segment consists of postpaid mobile and prepaid mobile.

Source: M1’s earnings presentation

M1 Chief Marketing Officer, Poopalasingam Subramaniam, said:

“For second quarter 2017, our postpaid customer base decreased by 4,000 quarter-on-quarter to 1.27 million. This was due to the migration of customers previously on 2G data to the M2M platform following the shutdown of the 2G network in April. Customers of M2M platform are not included in the mobile base.

There was also rationalization by customers, which resulted in dormant lines being terminated as their projects ended. The reduction in numbers was mostly due to churn.

Prepaid numbers base grew by 2,000 quarter-on-quarter to 777,000.”

M1 saw a decline in the number of subscribers quarter-on-quarter and a slight increase in prepaid subscribers. According to Subramaniam, the decline was due to the shutdown of the 2G network.

Source: M1’s earnings presentation  

However, postpaid average revenue per user (ARPU) was down year on year, but up quarter on quarter. Subramaniam said:

“Postpaid revenue for second quarter ’17 increased 1.4% quarter-on-quarter to $144 million. Postpaid ARPU for second quarter remained stable at $55.80.”

As a whole, postpaid revenue for second-quarter was down 0.6% year-on-year to $144 million. It’s worth noting that the postpaid revenue accounted for the bulk of M1’s mobile services revenue of $160 million in the second quarter.

Moving on to the prepaid side. 

Source: M1’s earnings presentation

Prepaid ARPU suffered a steeper decline compared to postpaid ARPU. Subramaniam said:

“Prepaid revenue for second quarter 2017 remained stable quarter-on-quarter at $15 million. Prepaid ARPU for the quarter decreased to $10.50 due to lower voice usage.”

Prepaid ARPU fell 4.5% quarter to quarter and a hefty 14.6% year on year. Subramaniam rounded up the presentation with a comment on the market share for both sub-segments.

“Based on published data, as at end April 2017, postpaid market share was 25% and prepaid market share was 23%.”

In the first-quarter, M1’s postpaid market share was 24.9% while prepaid market share was 23%. Despite the revenue declines, M1 had increased its postpaid and prepaid market share in April.

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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.