M1's mobile business haunted by OTT services

Mobile service revenue dipped 2.8%.

The continued preference of Singapore mobile customers for over-the-top (OTT) services has led to the 2.8% decline in M1’s mobile service revenue.

According to analysts from RHB, M1’s mobile business was hurt by the 17% decline in its prepaid service revenue.

M1's postpaid base also shrunk by 4,000 this year as the company shut down its 2G network, migrating its 2G data subscribers to its machine-to-machine (M2M) platform, which is not part of the subscriber tally.

As a result, 21% of the company's core profits fell in Q2, bringing the company's first half year earnings to $68.8m.

Mobile services made up 62% of M1's service revenue in the first half of the year. Only higher finance charges and a 20% rise in handset costs softened the impact of the decline in the company's overall service revenue.

"Management expects handset cost to remain high due to stiff competition and re-contracting/retention activities," said RHB research analysts.