Hold the line: M1's roaming revenues stuck under pressure

Here's what to blame.

According to CIMB, roaming revenues are under pressure due to declining usage of voice and data roaming and
falling inter-operator termination rates.

Here's more:

We expect a special DPS of 4 cts at end-FY13 given its low net debt/EBITDA of only 0.5x. Our call changes from Outperform to Add under our new rating structure.

Likely re-rating catalysts are strong earnings growth and special dividend payouts. Our DCF-based target price is $4.10.

Monetising mobile data

Twelve months after the launch of tiered data plans, 32% of postpaid users have switched to these plans which cost 5% more on average. We expect the adoption rate to double to 60% by end-14.

ARPUs are also bolstered by the move to higher tiers by 11% of subscribers who renew contracts. C.15% of these users exceed their data bundles and incur a penalty.

Data usage is rising, spurred by higher speeds with the introduction of LTE and richer content available.

Fixed broadband

Fixed broadband, where M1 rides on the NGNBN, is a growth driver. Competing on price and bundling it with mobile broadband, M1 has been disrupting the market and challenging SingTel’s and Starhub’s dominance. Revenue contributions from fixed broadband have doubled yoy to 4.5% in 9M13.