M1 lags among telcos due to lack of bundled services

Analysts believe though that this concern is overdone - but on what grounds?

According to CIMB, year-to-date, M1’s share price has only risen 2.4%, as compared to SingTel’s 11.0% climb and StarHub’s 24.4% increase over the same period.

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One reason for M1’s underperformance is probably linked to its lack of bundling of services. But we think this concern is probably overdone, given that M1 has been able to defend its mobile market share, despite it having the highest churn rate among the three telcos.

And because M1 is not involved in the highly competitive Pay TV arena, it does not have to deal with rising content costs. As a result, M1 is experiencing less pressure on margins. We continue to like M1 for its defensive earnings and relatively attractive dividend yield of 5.7%.