Annualised 1H13 core net profit met both CIMB and consensus
estimates at 96% and 99%, respectively. The surging take-up of tiered
data plans is starting to show, with service revenue growth soaring to
a 10-year high of 8% yoy while EBITDA margin is fairly resilient.
Despite the higher subsidies for the
Samsung Galaxy S4 launch, M1
declared a DPS of 6.8 Scts (77%
payout), which is higher than the 6.6
Scts (80% payout) in 1H12. It remains
our top Singapore telco pick and one
of our preferred telcos in the region.
M1’s strong earnings growth is a
re-rating catalyst for the stock.
A strong quarter
M1 posted a solid 2Q13 because of
the surge in mobile service revenue,
up 8% yoy in 2Q (the highest in more
than 10 years). Postpaid ARPU rose
2% qoq, which we believe indicates
the beginning of an upward trend in
ARPUs, driven by the rapid take-up of
tiered data plans. 26% of M1’s
postpaid users are now on tiered
plans from 20% in 1Q13.
our estimate of 35% at end-FY13 to be
exceeded. The users on tiered data
plans pay S$3/month more than
users on the old plans or 5% of
broadband users that continued to
drive subscriber growth, and
resilient EBITDA margin that
declined by only 1.2% pts qoq despite
the higher subsidies expensed for the
Samsung Galaxy S4 launch in 2Q.
M1 lowered its FY13 capex guidance
to S$130m from S$130m-150m as it
now has a better estimate of its
In response to our question on why
M1 only bid for 2x20MHz of
spectrum in the 1800MHz band vs.
the 2x25MHz that it occupies today,
management said that it will require
less 1800MHz spectrum in the future
because 1800MHz spectrum
currently carries 2G traffic and will be
freed up when 2G users migrate to 3G
The spectrum will be used
mostly/exclusively for 4G/LTE traffic
by 2017, when it is refarmed.
The spectrum payments of S$40m for
the 2x20MHz in the 2.5GHz band and
S$64m for the 2x20MHz in the
1800MHz band are due on 14 Dec
and 16 Sep, respectively. (Read Report)
Read Related Reports
Source : CIMB Research
Labels: M1, Telco