M1 already has 43,000 4G users three weeks after the launch

The switchover from 3G to 4G is expected to be faster than from 2G to 3G.

Here's more from CIMB:

Take-up for 4G is off to a good start but capex will be elevated until 2014. Despite cutting our FY12-14 core earnings by 9-14% due to the SAC surprise and our overly aggressive ARPUs, we raise our DCF-based target price to S$2.96 (WACC 8.0%) as we roll it forward to end-13.

M1 remains a Neutral as it lacks catalysts while StarHub is our top pick.

Strong 4Q expected
M1 expects 4Q to be much stronger qoq due to 1) revenue from customers added in 3Q, 2) lower SAC due to a higher composition of iPhones which M1 does not expense as it is treated under fair value accounting, and 3) higher data revenues as users exceeding 2GB of data per month upgrade to higher-tier data bundles.

M1 had scaled back the amount of data bundled from 12G to start from 2GB.

Capex to remain high
To our surprise, M1 expects capex to remain “elevated” until 2014 instead of 2013. It plans to expand its LTE/4Gcapacity and, at a later stage, upgrade it to LTE Advance which offers higher throughputs. M1 reiterated its capex of $120m for FY12 or 16% of service revenue.

Bullish on 4G
M1 expects the switchover from 3G to 4G to be faster than from 2G to 3G given the strong initial take-up of 4G. 60% of 2G users switched to 3G within 3 years. It has 43k 4G users three weeks after launch. We believe this is due to the better user experience on 4G devices compared with early 3G devices which were plagued with poor battery life and lack of content.