Mobile operator M1 posted a better-than-expected 1.8 per cent rise in first-quarter net profit to $41 million, thanks to a reduction in both handset subsidies and cost of sales.
Revenue, however, dipped 7 per cent to $243 million for the three months ended March 31. Lower handset sales and higher customer churn in the quarter offset growth in its mobile data and fixed broadband businesses.
Although it gained 12,000 post-paid subscribers, the telco still lost 64,000 mobile customers in total as 76,000 pre-paid SIM cards expired in the quarter.
M1 chief executive Karen Kooi downplayed the impact of this loss, saying: "It's purely housekeeping."
As at March 31, M1's mobile customer base stood at 2.045 million, including 223,000 subscribers on its fourth-generation (4G) mobile network. During the quarter, the firm added 8,000 fibre broadband customers, bringing its total base to 60,000 - or a local market share of 20 per cent.
Asked whether the lack of content is scuttling M1's fibre broadband sign-up rate, Ms Kooi said: "I don't think so... We think that premium content is not commercially viable. We are unlikely to go down that route."
In contrast, its rivals SingTel and StarHub bundle their broadband plans with pay-TV services.
M1 expects capital expenses to come in between $130 million and $150 million this year as it upgrades its 3G network as well as billing and customer care systems, among others.
It announced on Monday that it will spend $85 million on its 3G network - to boost indoor and outdoor coverage, and minimise the duration of any service outages should a part of its network go down.
This followed a major disruption in January, when a switch damaged by water from a fire sprinkler brought down 3G services in the south-west parts of Singapore for as long as 64 hours. The announcement also came as new 3G service standards kicked in at the start of this month, mandating that all indoor areas have to achieve 85 per cent mobile coverage.
Nomura Securities managing director Sachin Gupta said the results were "a decent start" to the year. He said three factors would continue to buoy M1's share price: expanded 3G coverage, increasing fibre sign-ups among corporate customers, and a drive to convert post-paid mobile users from unlimited data plans to plans that are priced based on usage.
Earnings per share for the group stood at 4.5 cents for the quarter, compared with 4.4 cents in the previous corresponding period.
Net asset value per share was 43.4 cents as at March 31, up from 38.1 cent as at Dec 31.
M1's counter closed five cents higher at $3 before the release of its first-quarter earnings result on Wednesday.
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