M1 Q3 net profit up only marginally as it struggles to compete

23 Oct 2007

Singaporean wireless operator MobileOne Asia (M1) says net profit in the three months to 30 September was SGD43.6 million (USD29.7 million), up just 1.6% year-on-year, as it labours to make headway in the country’s saturated mobile market. The group’s operating revenues climbed 5.8% to SGD200.2 million in a period in which M1 signed up a further 58,000 subscribers to maintain its roughly 28% market share. Average revenue per user (ARPU) was also broadly unchanged at SGD61.8 per month for contract users and SGD15.9 for pre-paid customers, although sales from handsets fell 23% to SGD16.1 million due to the sale of a higher proportion of cheaper models.

M1 has been trying to boost returns from data-based services in 2007. It reported that revenues from data services rose to 21.7% in the third quarter compared with 19.2% in Q306 aided by the launch of new offers, such as a pre-paid 3G product and M1 Broadband, a laptop-based 3G service that enjoyed good sales in the summer. However, the company is struggling to meet its own target of having revenues from data contributing 30% of the total by 2009.

Unlike rivals such as SingTel, which reported data as a percentage of revenues was 28% in Q3, up from 23% a year ago, M1’s lack of fixed line infrastructure is now working against it. Whereas SingTel and number two operator StarHub can both bundle fixed and mobile services, M1 is forced to pay for expensive leased lines in order to backhaul its mobile traffic. As data traffic increases, so does M1’s bill for backhaul. The company’s CEO Neil Montefiore has highlighted lowering costs as a priority, and in the coming months he plans to start rolling out a high speed fibre-optic network that will provide M1 with a cheaper backhaul alternative in the long term and allow it to compete against SingTel and StarHub in the fixed line broadband market. To help achieve this, full year CAPEX will grow to SGD70 million, up from SGD54.6 million in 2006.

Singapore, M1