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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.

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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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