M1 reports 20.8% decline in net profit for Q2 2017

SINGAPORE — Telecom operator M1 on Tuesday (July 18) reported a 20.8 per cent decline in net profit for the second quarter ended June 30 at S$32.5 million from S$41 million in the corresponding period a year ago.

Higher borrowings and interest cost, together with increased competition, put pressure on margins.

Revenue for the second quarter was up 4.7 per cent to S$251.6 million, from S$240.4 million in the same period last year. The company said in a media release that it estimates a decline in net profit after tax for the whole of this year.

However, M1’s chief executive Ms Karen Kooi said that the company was “well positioned” to capture new opportunities presented by the digital economy.

“We have been investing in NB-IoT (narrowband Internet of Things) network and digital solutions, and expanded our offerings to include managed infrastructure services, cyber security, business solutions and analytics. This would enable us to better serve our customers and generate new revenue streams for future growth,” Ms Kooi added.

For the half-year period ended June 30, M1’s net profit at S$68.6 million was down 17.6 per cent from S$83.5 million in the same period in the previous year. Revenue rose 2.9 per cent to S$512.3 million from S$498 million.

Compared to last year, finance costs increased 34.6 per cent to S$2.1m for the second quarter and 45.5 per cent to S$4.1m for the first half of the year due to higher borrowings and interest rate.

In response to analysts’ queries on the entry of TPG as the fourth telecom operator, the company management said the entry of the new player is bound to “increase competitive activities” going ahead, with handsets priced “more aggressively”. The company, however, noted that there has been no “hard impact” in terms of wage inflation due to new competition.

The company’s earnings per share (EPS) for the second quarter stood at 3.5 Singapore cents, down 20.8 per cent from 4.4 Singapore cents last year during the same period. For the first half year, EPS was down 17.4 per cent to 7.4 Singapore cents from 9.0 Singapore cents.

The company announced an interim dividend of 5.2 Singapore cents per share.