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M1 Ltd’s Latest Earnings: Final Dividend Increased By 5.1%

Yesterday, local telco M1 Ltd (SGX: B2F) reported its fourth-quarter earnings. The reporting period was from 1 October 2017 to 31 December 2017.

M1 is the smallest player within Singapore’s telco industry, sitting in third place behind Starhub Ltd (SGX: CC3) and Singapore Telecommunications Limited (SGX: Z74). M1’s business has four segments, namely, mobile services, fixed services, international services, and handset sales; the first three are collectively known as services revenue.

You can learn more about M1 here and look at last quarter’s earnings here .

Financial highlights

Here’s a rundown of M1’s latest financial figures:

1. Fourth-quarter revenue fell 2.1% year-on-year to $307.2 million. The decline was driven by an 18.6% decrease in handset sales. For the full year, M1’s revenue was $1.07 billion.  

2. Services revenue came in at $215 million for the latest quarter, up 7% from the $201 million recorded a year ago. For 2017, service revenue was $828 million or up 2.7%.

3. For the fourth quarter, net profit rose 11.7% year-on-year to $35.8 million. That said, profit for the full year was down by 8.7% to $136.9 million.  

4. Earnings per share (EPS) for the quarter was 3.4 cents, down 1.2% year-on-year. M1 recorded an EPS of 14.3 cents for 2017.

5. For the reporting quarter, cash flow from operations came in at $43.5 million while capital expenditure was $46.9 million; M1 had negative a free cash flow of $3.4 million. For 2017, free cash flow was $87.9 million, down from the $128.9 million recorded in 2016. The calculated figures include M1’s spectrum payments.  

6. As of 31 December 2017, the group had $46 million in cash and equivalents and $450 million in debt. This gave M1 a net debt position of $404 million, an increase compared to end-2016, where it had a net-debt position of around $390 million.

M1’s service revenue has increased for the third quarter in a row. Unlike the previous three quarters, profits rose 11.7% year-on-year alongside its revenue increase. On the flip side, free cash flow was negative for the quarter, and down for the full year. The telco also took on more debt.

The board of directors proposed a final dividend of 6.2 cents per share, bringing the total dividend payout to 11.4 cents per share for 2017. The final dividend rose 5.1% as compared to 2016’s final dividend of 5.9 cents. For the full year, total dividends were down still down 11.6%.   

Operational highlights

M1’s mobile service revenue saw a 4.4% year-on-year increase. M1’s post-paid customer base rose by 20,000 while its pre-paid customer base added 11,000 users compared to the previous quarter. Meanwhile, average revenue per user (ARPU) for the post-paid customer rose 5.8% year-on-year while pre-paid ARPU fell by 1.2% compared to a year ago.

M1’s overall market share (including post-paid and pre-paid) rose to 24%, as of November 2017. M1’s churn rate (rate of customers leaving) was 1.2%, unchanged from the same quarter the year before.  

Elsewhere, fixed services sales enjoyed 33.3% year-on-year increase to $36 million. Revenue was helped along by an increase in its fibre customer base by 29,000 subscribers compared to the previous year. ARPU also rose 4.4% year-on-year.

International call services revenue continued to fall, slipping 8.9% in the reporting quarter. International call services revenue was $14 million in the fourth quarter.  

Karen Kooi, M1’s chief executive, added her thoughts:

“As we transform to a Smart Communications Provider, we progressively scale up our ICT capabilities and portfolio of digital services to capture opportunities in IoT and Smart Nation. The digitalisation will improve operational efficiency and enhance our customer touch-points, providing a seamless experience for digital natives and tech-savvy segment.”

Foolish summary

M1 shares closed at $1.87 yesterday. At that level, M1 sports a price-to-earnings ratio of 13.1 and has a dividend yield of 6.1%.

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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.