During the year, M1 continued to focus on profit growth, amidst the competitive challenges of a mature and highly penetrated mobile phone market. With traditional voice revenue coming under pressure, M1’s profit growth for 2006 came largely on the back of prudent and disciplined cost management initiatives, while achieving encouraging growth in prepaid customer base and non-voice services. Most of M1’s customer growth in 2006 was driven by the prepaid segment, and this was achieved despite the impact of implementing the new registration requirements mandated by the authorities and having to terminate a significant number of prepaid lines that had not met the registration deadline. Prepaid revenue came under pressure largely as a result of incentives to encourage registration during the first half the year. With the registration exercise completed, M1 focused on introducing new plans and benefits for the prepaid base. This included the Super M cards and top-up cards that offer super-sized value and additional benefits targeted at the cost conscious local users and foreign workers. In March, PLDT Singapore, in partnership with M1, launched a prepaid mobile service targeted at the Filipino community in Singapore. The Smart Pinoy service rides on M1’s network infrastructure and offers voice, messaging and Filipino-centric contents to customers. Such a partnership arrangement is aimed at reaching out more effectively to niche customer segments and thereby growing revenue.

M1’s strategy to grow and develop the retail consumer segment emphasises products and services that are relevant, innovative and exciting to customers. As voice revenue comes under increasing pressure, we look to non-voice as a key source of growth. Examples of non-voice services that we introduced in 2006 include a 3G mobile channel which offers popular entertainment programmes on the MiWorld mobile portal, and services that appeal to the Internet generation such as Mobile Blogging, Mobile Podcast and m-Auction. In the year, we also partnered Celcom to offer free roaming 3G video calls and free IDD 3G video calls between Singapore and Malaysia to M1 customers, on a promotional basis, to encourage them to experience video call service.

Our increased focus on the enterprise sector bore fruit during the year with a host of new products and services targeted at this segment. M1 introduced the TalkShare Plan, which allows multiple users within an enterprise to share local voice airtime and SMS from a common bundle. Another useful product we introduced is the M1 Windows Mobile® Email, which enables customers to access office emails on Windows Mobile-powered devices on the move. Through our partnership with Vodafone, M1 launched the Vodafone Mobile Connect Card for laptop users to access the internet using M1’s 3G network; Singapore’s first 3G Router that enables customers to set up Wi-Fi hotspots anywhere in Singapore using 3G connectivity; and Singapore’s first 3G-enabled BlackBerry® device. These innovative products and services positioned M1 well in the enterprise market and helped us compete for market share in this discerning and demanding segment.

2006 marked a significant milestone in M1’s history with the company’s entry into the broadband Internet market in December, as this represents a new market for M1. M1’s wireless broadband service – branded M1 Broadband – rides on our new HSPA network and offers both consumers and business customers a compelling and attractively-priced alternative to existing wired broadband offerings in the market. Besides having a choice of three price plans offering different downlink access speeds, our broadband customers enjoy Internet access with the added flexibility of being able to use the service wherever they are. More significantly, M1’s move into the broadband space signals our intention to be a serious player in the home, office and mobile broadband environment, with the prospects improving as we further upgrade the speeds on M1’s HSPA network.

The outlook for the Singapore economy in 2007 is positive and this bodes well for consumer spending sentiment. At the same time, competition in the local mobile phone market will remain keen and the expected introduction of enhanced Mobile Number Portability (MNP) towards the end of 2007 is likely to prompt increased marketing activity by all mobile operators as they take advantage of this event to acquire new customers, as well as seek to retain existing ones. Thus, we view enhanced MNP as both an opportunity and threat, and will be prepared to make the most of the former and defend against the latter.

Looking ahead, M1 believes there is still potential in the prepaid market and will continue to develop innovative services and partnerships to grow this segment, both in terms of customer numbers and usage. For the postpaid segment, the chief focus will be on further improving the revenue contribution from non-voice services. We believe a key aspect of this will be to harness the growing trends of the wired Internet world, such as community networking, user-generated content and online advertising, to create revenue opportunities in the wireless world. Beyond our core business, M1 needs to create new business opportunities in order to continue to grow into the future. In this context, our increased focus on the enterprise segment and entry into the broadband Internet market are key steps in seeking more avenues of growth in the short term, while for the medium to long term, we are positioning M1 to leverage new technology developments and new industry trends to offer a wider suite of services beyond the wireless world.

In the area of contributing to the community, I am heartened that, besides working hard to meet our business targets, M1 management and employees continue to commit themselves to reaching out to the less privileged in society. Our employees, through the SunCare Club, gave generously of their time and effort in organising activities such as birthday parties and outings for children of our adopted charitable organisations. In addition, we raised more than S$200,000 for these charities through activities such as M1 Staff Carnival and a golf tournament involving business partners. In the year, M1 also continued to support the development and promotion of the arts and sports in Singapore. We were the title sponsor of the M1 Singapore Fringe Festival 2006 and the corporate sponsor of Singapore Repertory Theatre, as well as continued our support of rugby development in schools. M1 is honoured to be recognised, for the fifth consecutive year, with the Distinguished Patron of the Arts Award for our contributions in this field.

In closing, I would like to express my sincere thanks and appreciation to all M1 employees for their dedication and hard work in the past year, and I look forward to working together with all to meet our objectives and targets for 2007.

Neil Montefiore
Chief Executive Officer