M1

M1: Recent network outage on 4 Feb marks the fourth one over the past 12 months. While the causes of these incidents vary, this is clearly negative to the reputation of its brand relative to peers. CS believe the near-term financial impact is limited given that the compensation (free local voice, SMS and MMS for 1 day) would not materially affect its revenues, and IDA's penalty is unlikely to be higher than $1.5m (Jan-13 incident) given shorter outage. While medium-term impact (e.g. reputational damage) is more difficult to assess, a similar case in Thailand (DTAC) suggests that there could be headwinds for a few quarters due to the churn of quality sensitive customers, but the damage is still recoverable when network quality improves. CS note that network quality is key to improvement in data monetisation and thus the failure to improve this could derail M1's (and the industry's) effort to further improve monetisation from here on. House maintains its Outperform rating with $3.72 TP.