Operating and Financial Review

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Company Overview

M1 is an established brand that provides cellular mobile communications services to over 1.5 million users in Singapore, international call services to both mobile and fixed-line users, and wireless broadband Internet services to home, office and mobile users. M1 offers a wide range of mobile voice, non-voice and value-added services on its nationwide cellular network and is widely recognised as an innovative operator. With emphasis on quality, customer service, innovation and value, M1 aims to take the lead in personal voice and data communications. Customers subscribe to M1’s mobile services on either a postpaid or prepaid basis from a variety of price plans. M1’s wireless broadband internet access service, M1 Broadband, was launched in December 2006, offering customers a choice of service plans at different download access speeds, as well as a range of broadband access devices.

In the area of international call services, M1 offers mobile and fixed-line customers International Direct Dial (IDD) services, using prefixes 002 and 021, and an International Calling Card (ICC) service using prefix 1818. M1 also sells international wholesale minutes to other international service providers.

M1 commenced commercial operations in April 1997 with the launch of its GSM network. It subsequently rolled out a WCDMA network and began offering 3G services in February 2005. In December 2006, the 3G network was further upgraded with High Speed Packet Access (HSPA) to increase network efficiency and support broadband services at downlink speeds of up to 3.6Mbps.

The Company holds a facilities-based operator (FBO) licence and a telecommunication dealer’s class licence issued by the Infocomm Development Authority (IDA), and a Media Development Authority (MDA) class licence. In April 2001, M1 also obtained an FBO licence for the provision of 3G mobile communication systems and services.

M1 was listed on the Singapore Exchange in December 2002.

In 2007, M1 achieved a net profit after tax of S$171.8 million, representing a 4.4% growth over S$164.6 million recorded in 2006. Net profit margin on service revenue was 23.6%, a slight decline from 24.1% in 2006. Operating revenue was 3.9% higher at S$803.3 million and service revenue was 6.4% higher at S$727.1 million. Earnings before interest, tax, depreciation and amortisation (EBITDA) was 3.3% lower at S$320.7 million, representing a margin of 44.1% on service revenue.

As at 31 December 2007, M1 had a total of 1,535,000 mobile customers, comprising 856,000 postpaid customers and 679,000 prepaid customers. Based on market statistics published by IDA as at 31 December 2007, M1’s market share of the total mobile customer base was 27.3%, and M1’s postpaid and prepaid market shares were 28.4% and 26.1% respectively.