TELCO operator M1's net profit declined 6.9 per cent year-on-year to S$42.5 million, from S$45.7 million, for the three months ended March 31, 2016.
This is due to higher upfront customer acquisition cost. Revenue fell 12.6 per cent to S$257.6 million from S$294.8 million.
The company noted that the new Samsung S7 was launched in the first quarter this year instead of the second quarter as was the case with last year's Samsung S6. Therefore, the impact was accounted for in this quarter instead of the second quarter.
The company's earnings per share was down 7.2 per cent to 4.5 Singapore cents from 4.9 Singapore cents one year ago.
Sequentially, the telco's revenue was down 16.3 per cent from the S$307.9 million it recorded in the fourth quarter of 2015.
The telco recorded lower handset sales this quarter, which came in at S$54.2 million, as opposed to S$98.8 million in the fourth quarter of 2015. In the year-ago quarter handset sales accounted for S$90.4 million.
At the same time, the company's handset cost dropped to S$76.4 million from S$109.6 million one year ago and S$122.4 million in the previous fourth quarter of 2015.
The lower handset costs as well as lower handset sales revenue could be due to SIM-only plans sold by the telco during the quarter.
M1's service revenue remained stable year-on-year at S$203.4 million while free cashflow increased 90.8 per cent year-on-year to S$64.1 million.
Fixed services revenue grew 26.4 per cent to S$24.5 million and now accounts for 12 per cent of service revenue.
The increase was driven by growth of 9,000 residential and corporate fibre customers in the quarter, bringing its base to 136,000.
During the quarter, M1 also added 13,000 postpaid customers and 1,000 prepaid customers, to bring the total mobile customer base to 1.94 million as at March 31.
Monthly postpaid churn improved to one per cent, compared to 1.1 per cent in the preceding quarter.
Average postpaid smartphone data usage was 3.3 GB (gigabytes) per month in first quarter of 2016, up from 3.2 GB per month a year ago.
Average prepaid data usage grew to 1.3 GB per month, up from 0.8 GB per month a year ago.
Mobile data contribution increased 11.8 percentage points year-on-year to 53.1 per cent of service revenue.
Karen Kooi, chief executive officer, M1, said that during the latest quarter, M1 enhanced its product propositions through improved SIM-only plans, upsized data bundles and an expanded coverage of Data Passport destinations.
M1 also expedited its investment in fibre network to commercial buildings and major data centres, and expanded its suite of cloud-based offerings and smart vertical solutions, to further strengthen its capabilities to capture growth opportunities in the Corporate and Government segments, she added.
"M1 will continue to offer new and innovative products and services to build customer loyalty and attract new customers.
We are also investing in new technologies that will complement our core business. This may be in early stage companies, for which benefits may only accrue in future years," said Ms Kooi.
Based on current economic outlook and barring unforeseen circumstances, M1 estimates stable performance for the year 2016.
M1 shares closed trading on Wednesday at S$2.48, up one cent.
This article was first published on April 14, 2016. Get The Business Times for more stories.