M1

M1: 1Q13 results slightly below estimates - Service revenues increased 3% q/q and 4% y/y to $199.6m; - Total revenues declined 7.4% y/y to $243m (due to lower handset sales); - EBITDA declined 2% q/q and increased 3% y/y with margins of 39.5%; - Earnings increased 1.8% y/y to $41m; - Postpaid ARPU of $61 was down 2 % q/q and 3% y/y, due to seasonality and declining roaming rates; M1 notes that 20% of its postpaid base now subscribe to tiered plans, with 9% of them exceeding the subscribed data bundle. Current average data consumption is at ~2GB/ month compared to 1.6GB a year ago. Management expects the positive impact of tiered data pricing to materialize over time. Capex will likely remain high at $130-150m/year over the next few years, for the upgrading of the network to LTE Advance and for capacity expansion. Street still looking out for 1) data re-pricing- still has a way to go as only 20% of M1’s postpaid subs are on new data plans; 2) NBN to start contributing more to earnings as it gradually gains scale; 3) M1 is focused on strengthening its network reach still, which should yield future cost benefits; Group trades at forward 5% yield. CS maintains OUTPERFORM, with TP of $3.20; Nomura maintains BUY with TP of $3.18; DB has a SELL, with TP of $2.20;