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Broker's take: OCBC keeps 'hold' on M1 on results within expectations

Friday, October 17, 2014 - 10:47
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OCBC on Friday maintained its "hold" rating on M1 with an unchanged fair value of S$3.37, on the back of the telco's nine-month financial results which came within the broker's expectations - ST PHOTO FILE

OCBC on Friday maintained its "hold" rating on M1 with an unchanged fair value of S$3.37, on the back of the telco's nine-month financial results which came within the broker's expectations.

"Nine-month revenue was almost flat at S$730 million, meeting 71 per cent of our full-year forecast, while net profit rose 9.7 per cent to S$131.2 million, or about 79 per cent of our FY14 estimate, which we deem to be largely in line. This, as expenses are likely to increase in Q4 due to year-end promotions," analyst Carey Wong said.

"Going forward, management says it can continue to achieve moderate earnings growth within the single-digit range, driven by the stronger data usage," he added.

The analyst also noted that M1's total subscriber base has fallen 5 per cent quarter-on-quarter to below the two-million mark, due to a fall in pre-paid customers.

M1 has also said that competition is also likely to remain keen, although the pace of fibre acquisition is flattening out compared to previous quarters.

It has also maintained its S$130 million capital expenditure guidance due to ongoing upgrades to its network to the higher-speed and higher-capacity LTE-Advanced.

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