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The Positive And Negatives That Investors Should Know About M1 Ltd Latest Result

M1 Ltd  (SGX: B2F)  is the smallest player within Singapore’s telecommunications industry, sitting behind Starhub Ltd  (SGX: CC3) and leader Singapore Telecommunications Limited  (SGX: Z74). M1’s business has four segments, namely, Mobile services, Fixed services, International Call services, and Handset sales.

The company has recently released its 2018 first quarter (Q1 FY18) earnings update. In this article, we will look at the good and the bad.

We will begin with the positives

First of all, revenue was up by 0.5% year-on-year to S$254.1 million. More importantly, service revenue was up 3% year-on-year to S$184.7 million.

Secondly, free cash flow for the quarter was higher by 39.5% year-on-year to S$ 24.4 million.

Thirdly, postpaid mobile subscribers number grew 2.6% year-on-year to 1.304 million. Similarly, Fibre customers was up 15.3% year-on-year to 194K.

Lastly, average revenue per user (ARPU) for Fibre broadband grew 4.5% year-on-year to S$ 39.8.

And now the negatives:

The average revenue per user (ARPU) declined across the mobile services. ARPU for postpaid, prepaid and data plan were down by 0.7%, 9.4% and 17.9%, respectively, on a year-on-year basis.

Secondly, overall expenses grew faster than revenue in this quarter, resulting in a decline in EBITDA margin from 43.0% a year ago to 40.8% this quarter.

Thirdly, prepaid mobile subscribers number was down by 11.2% year-on-year to 688K. This resulted in a decline in market share from 22.6% last year to 22%.

Conclusion:

In summary, M1’s latest results reflect the continuous challenge within the telecommunication industry, resulting in pricing pressure in the mobile segment.

On the positive note, M1 was able to grow its fixed services both in term of subscription and ARPU.

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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.