M1

M1: 1Q15 net profit in line, increasing 6.6% y/y to $45.7m, while EBITDA grew 2.3% to $83.3m, while EBITDA margin expanded 0.8ppt to 40.8%.

Operating revenue rose 22.8% to $294.8m, propped up by handset sales that grew 2.5x to $90.4m.

Service revenue stayed relatively flat at $204.4m, as increases in mobile telecommunications services and fixed services were offset by decreases in international fixed call services.

Delving into other trends:
1) Net postpaid ARPU was flat y/y but dipped 3.2% q/q to $55.

2) Despite higher usage of data (average: 3.2GB vs. 2.8 GB), data ARPU dropped 10.3% y/y (-4.4%) to $17.5m, diluted by bundling with fixed services.

3) 68% (4Q14: 66%) of post-paid customers on tiered-data, 20% (4Q14: 22%) exceeded quota.

4) Prepaid ARPU was higher by 19.8% y/y to $15.1, but fell 10.7% q/q on seasonally lower voice contributions.

5) Postpaid users stood at 1.2m, with growth slowing down (+1.7% y/y, +0.7% q/q), while the impact of regulatory changes for prepaid is over (-26.2% y/y, +1.3% q/q) to 713,000 users.

6) There were 5,000 of net adds in the fibre broadband business.

On prospects of a potential new entrant, management reiterated that the spectrum auction framework should be announced at end 2Q15, and that the spectrum cost would determine the new player’s viability.

Aside, Maybank-KE expects to see at least a few more quarters of slowing postpaid ARPU, due to bundle-sharing plans, in which M1 was late to join the party, relative to StarHub and SingTel.

M1 is currently trading at 11.6x EV/EBITDA.

Maybank-KE currently has a Hold call on M1 with TP of $3.60.

Latest broker ratings:
Deutsche Bank maintains Buy with TP of $4.50
UBS maintains Neutral with TP of $3.95
Credit Suisse maintains Neutral with TP of $3.85
CIMB downgrades to Hold from Add with TP of $3.80
OCBC maintains Hold with TP of $3.66
UOB KayHian downgrades to Sell from Hold with TP of $3.60