M1’s net profit dips by 7% to $42.5m

On back of its dipping mobile revenue.

The telecommunications giant will have to endure lacklustre mobile revenue for quite a while as it is forced to slash its prices to keep up with competition.

According to a report by OCBC, mobile revenue was down by 3% qoq, due to lower post-paid revenue as the increased take-up of SIM-only plans led to a 6% drop in post-paid net ARPUs.

Meanwhile, OCBC said M1 has retained its will to strengthen its product propositions to both retain and attract customers.

“Some of these include improved SIM-only plans, upsized data bundles and expanded coverage of its roaming data passport countries. Management also explained that the upsized data bundles could be seen as swapping “ad hoc” revenue for more “certain” recurring income of S$6/month; also notes that the percentage of customers who exceed their data bundles remain low around 20%,” OCBC said.

Additionally, OCBC said it has kept its capex guidance at $140m for the year, not taking into account the $64m spectrum payment due in Sep 2016.

M1 added that it intends to spend similar capex in the next few years.

“Last but not least, M1 intends to invest up to 2% of annual revenue in new technologies (likely in early stage companies) to complement its core business, but noted that the benefits may only accrue in future years,” OCBC said.