Hot stock: M1 down 8% after Q2 earnings fall 20.8%, review of stakes ends

FOLLOWING the announcement of a 20.8 per cent drop in its second-quarter net profit to S$32.5 million, M1 shares fell 8 per cent to S$1.925 as at 9.15am.

The telco's earnings per share slid 20.8 per cent to 3.5 Singapore cents from 4.4 Singapore cents a year ago. M1, however, recorded a 4.7 per cent rise in revenue to S$251.6 million for the three months ended June 30, 2017.

After the market closed on Tuesday, shareholders Singapore Press Holdings, Keppel Telecommunications and Transportation and Axiata Group Berhad - which hold a total of 61 per cent interest in M1 - said that they have decided not to proceed further with the strategic review of their shareholdings.

The three shareholders had appointed Morgan Stanley Asia (Singapore) in March to undertake the review. Although some potential candidates surfaced, a finalised deal was not reached.

In April, a broker said that the management of StarHub did not intend to buy the company. Broadband services provider MyRepublic also said this month that it was not interested.

An analyst report from RHB said that M1's mobile service revenue (MSR) continues to be impacted by over-the-top substitution. MSR fell 2.8 per cent year-on-year in H1 2017, driven mainly by the 17 per cent decline in prepaid revenue.

"M1 continues to enjoy good billing momentum from multi-year enterprise and public sector jobs (including smart nation projects). This has fuelled the 22 per cent year-on-year rise in fixed services sales in Q2/H1 FY17. It expects good opportunities in the longer term from new digital and cloud based solutions and the launch of the nationwide narrowband Internet of Things (IOT) network, which would spawn innovative IOT applications."