M1 Annual Report 2007

To fulfill our customers’ needs, we listen, anticipate and act with a visionary spirit, enabling them to experience our innovative communication solutions, both at work and at play.

Mobile Services
The postpaid segment continues to be the mainstay of M1’s mobile business. As at 31 December 2007, M1’s postpaid customers formed 55.8% of its total customer base, but the postpaid business contributed 89.7% of its total mobile telecommunications revenue in 2007.

During the year, the growth in postpaid customer base was driven mainly by M1 Broadband. As the first operator to launch this nationwide wireless broadband service, M1 was the market leader with 70,000 broadband customers at the end of December 2007. With nation-wide coverage, simple “plug-and-play” devices and competitive price plans, M1 Broadband offers a strong value proposition for customers to enjoy wireless broadband services. As for mobile postpaid services, while voice revenue remained stable, there was continued growth in data usage. Contribution from non-voice services rose to 21.6% of service revenue, driven mainly by mobile data (excluding SMS) which increased to 8.4% of service revenue, compared to 6.3% a year ago. This was fuelled by the increasing prevalence of 3G and high speed downlink packet access (HSDPA) handsets, as well as new services introduced during the year. In 2007, M1 launched several new postpaid price plans which offer either free IDD or free weekend calls. Customers can now keep in touch with their family and friends overseas easily with free IDD calls to 18 destinations which include Australia, China, India, Malaysia, UK and US.

In the prepaid segment, M1’s customer base grew 28.6% over the previous year. However, growth from an enlarged customer base was offset by increased price competition and this resulted in stable year-on-year prepaid revenue. During the year, M1 introduced new competitive plans targeted at the mass market which included reduced tariffs, launched One2One Top-up which allows customers to transfer prepaid credits to other accounts and retailed lower denominated M cards to increase our product range. These initiatives reflect our commitment to continuously introduce innovative features and add value to our prepaid offerings.

In the international call services segment, M1 continued to drive sign-ups for IDD postpaid plans and increased the number of free IDD countries. There were also bundled promotions for our prepaid card and 1818 ICC. These initiatives, targeted mainly at the value segment and growing foreign population in Singapore, generated higher retail traffic and increased our market share, but also resulted in lower margin. Nonetheless, international call gross margin remained healthy at above 50%.

In 2007, M1 continued its track record of launching innovative services and these include:

• MeTV, Singapore’s first mobile video sharing service, was launched by M1 in January 2007 and introduced to StarHub customers in July 2007 through a collaboration between the two mobile operators. This service is aimed at the younger generation who grow up on reality television and the popular culture of video sharing. Users upload their video clips onto the MeTV site via multi-media messaging (MMS) and get paid by M1 every time when others download their video clips. This service has captured the interest and imagination of today’s youths and mobile savvy customers who enjoy using their mobile phones for entertainment and content sharing.

• mClassified is M1’s mobile version of classified advertisements, a service that provides customers a convenient platform to buy and sell using their mobile phones. Sellers can post their advertisements on MiWorld Mobile, M1’s mobile portal, anywhere and anytime, and the service supports both video and image uploads.

• M1 launched Singapore’s first 3G prepaid service, allowing prepaid customers to access richer mobile content and faster download speeds on their mobile phones.

• M1 Mobile eMail, a service which works on all GPRS-enabled handsets and across most popular e-mail accounts, allows users to read and reply e-mails easily while on the move. Users are notified of an incoming e-mail via a text message on their handsets even when roaming overseas. They can subsequently read, reply or forward the e-mail.

• M1 launched the country’s first location-based advertising (LBA) SMS service in October 2007, in partnership with Singapore Press Holdings. Retailers in Singapore now have a more direct, timely and effective way of communicating with their customers when they are within designated LBA zones, allowing relevant marketing messages and promotional offers to be sent via SMS to shoppers who are in the vicinity of their shops.

• In November 2007, M1 customers became the first mobile users in Singapore to enjoy an exciting and revolutionary version of the ubiquitous SMS. The new SMS2.0 is a next-generation service that brings together messaging, content and advertising in a single, seamless application, allowing customers to derive much more value and a unique experiencewhen they send and receive SMS.

• M1 is the first mobile operator to offer unlimited mobile video streaming subscription. It offers 3 new subscriptions including Entertainment, Sports & News and Music Videos. Customers can choose from a wide range of branded content such as MediaCorp drama serials, Discovery, MTV, Nickelodeon and live news streaming such as CNA,CNBC, Bloomberg and the latest music videos.

• M1 launched the Google search box on its MiWorld homepage in September 2007, an initiative based on the official, strategic partnership with Google to further increase data traffic. This is the first partnership Google has entered into with a telecom operator in Singapore.

• eBay Mobile was launched in August 2007 which allows users to browse, search, bid and buy on eBay - the world’s leading and most popular online marketplace, on their mobile phones anytime, anywhere.

At the enterprise level, several new products and services were also launched in 2007.

• EnterpriseText 2500 and EnterpriseText 5000 were launched in January 2007. These are message-centric plans catering to enterprise customers primarily using SMS as a means to reach out to their own clients.

• The Huawei E960 router, a portable device that allows users to share internet access as well as make/receive mobile voice calls using a fixed line phone, was launched in December 2007. Bundled with the new Broadband V plans, customers will be able to enjoy free incoming calls, attractive IDD rates and internet access with one device.

• December 2007 also witnessed the launch of the Fujitsu Lifebook U1010 (3.5G). This is the world’s smallest tablet convertible ultra mobile PC with M1 Broadband built in which enables customers to be connected anytime and anywhere.

We are a customer-focused business that demands excellence in everything we do. Our ability to provide a unique and compelling value proposition to our customers ensures the continued success of our business.

Retail Distribution
M1 has an island-wide network of operator-owned retail shops (M1 Shop) and operator-appointed distributor outlets that serve the consumer segment, as well as an enterprise sales team that serves the business segment. As at 31 December 2007, M1 operated a total of 12 M1 Shop outlets. In addition, M1 runs an e-shop, which sells mobile phones and accessories online.

Building a Brighter Brand
With the opening tagline of “What the world needs now is something a little brighter”, a new, brighter brand platform was introduced in November 2007. M1 has always been seen as a challenger brand, firstly by breaking the monopoly of the incumbent telecommunications operator, followed by providing class-leading customer service and introducing innovative products and services, as well as tariff plans that represent exceptional value. With the new brand campaign, M1 is committing itself to be the brighter solutions provider, with the aim to brighten its customers’ lives in the year ahead through brighter services, brighter content, brighter pricing plans and brighter solutions delivered by brighter people at M1. As a brand, M1 portrays optimism, creativeness, boldness and dynamism, with a zeal for innovation, a zest for customer service, and a contagious sense of fun.

Customer Service
M1 prides itself on service leadership and in 2007 continued to drive changes and improvements to ensure that it provides best-in-class customer experience. Enhancements, ranging from simple fine-tuning of its interactive voice response system to more complex re-configurations of the system to identify customers’ needs at various contact points, have allowed M1 to create a difference in the way customers are served. More than just providing service enhancements, M1 preserves the human touch by listening to its customers. M1 believes in generating a positive customer experience and strives to set the standard for exemplary customer service.

Network
M1 continued to enhance its HSPA network, extending the provision of downlink access speed of 3.6Mbps across Singapore, while continuing to expand coverage and capacity of its 3G network. To further increase operating efficiency, M1 has commenced the rollout of its own cellular backhaul network. This will allow M1 to move towards greater self provisioning in carrying traffic between its base stations and operating centres, thereby resulting in future cost savings. In addition, M1 will review its network efficiency and the competitiveness of its current infrastructure and technology roadmap. The Company also completed the modernisation of its core switching network, in preparation ahead of the migration to an all-IP based network infrastructure.