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What Investors Should Know About M1 Ltd’s Attitude Towards Disruption

M1 Ltd  (SGX: B2F) is an easily recognisable company in Singapore, given that it’s our island nation’s third largest operational telco.

In mid-March, M1 published its annual report for the year ending 31 December 2017. Given that reading an annual report is one of the best ways to keep up with a company’s developments, I decided to go through M1’s latest annual report to understand the company’s prospects, and how it had performed in 2017.

Generally, when reading an annual report, I will pay close attention to the letter to shareholders that the company’s chairman and/or CEO writes. In this article, I will look at an area that I found interesting while reading the latest shareholders’ letter: Management’s thoughts on how to handle disruptive changes in its business environment.

To begin with, management openly addressed the fact that the telco industry is facing disruption. See the comments below:

“We see the emergence of new industries and ground-breaking business models across all industries. The telecom sector is not spared. Today, we have to reckon with new competitors from outside our industry. As we evolve, we too are adopting disruptive technologies and building new capabilities quickly.”

I think it is a positive that management is candid about the challenges that M1 is facing, and is communicating about the issue with shareholders.

M1’s management then went on to share the company’s plan to address the disruptive forces. The first component comes from M1’s culture (emphases are mine):

“At M1, it is deeply embedded in our culture to challenge and push boundaries, be ready to quickly adopt new practices, and to collaborate cohesively and with agility in executing our strategic plans. These virtues have been integral to our success in the past 20 years, and they will continue to serve us well in this rapidly-changing market.”

The second component involves M1’s reputation (emphasis is mine):

“Since M1’s launch in 1997, we have built a strong reputation for our innovation, excellent service and network quality.

In our short history, we have constantly challenged the status quo and stayed ahead of the curve in anticipating industry trends – first to offer nationwide 4G service, as well as ultra high-speed fixed broadband, fixed voice and other services on the Next Generation Nationwide Broadband Network (NGNBN). Most recently, in August 2017, we launched Southeast Asia’s first commercial nationwide NB-IoT (Narrowband Internet of Things) network, the second such network worldwide.”

The third deals with M1’s efforts in data analytics (emphasis is mine):

“In this digital age, one of our key assets is network data. With advances in data analytics, we can obtain both macro and micro insights into customer behaviour, usage patterns, preferences and interests as they happen. These insights allow us to create increasingly personalised offerings, improve network performance and enhance the customer experience. In B2B terms, M1 is able to use our unique anonymised data to provide big data solutions to corporate customers.”

In summary, M1 is aware that the telco industry is facing disruptive changes. And to counter the challenges, the company plans to count on its culture, reputation (on innovation, quality, and service), and data.

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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 Lawrence Nga doesn’t own shares in any companies mentioned.