Annual Report 2011

Industry overview and outlook

Advancements in telecommunications and technology have transformed the way we live, work and play.

Today’s office workers are no longer limited to working in their offices. With connected devices such as smartphones, tablets or laptops, they can access emails, retrieve information on the go, and even attend virtual meetings at all hours of the day, anywhere. Consumers can access the latest news anytime via online channels like Twitter, while social networks like Facebook allow them to share key moments of their lives, from birthday celebrations to weddings, with their family and friends across the world.

With the growing number of connected devices and the proliferation of applications and services – activities like online stock trading, e-filing of taxes and online gaming are already the norm today – fixed and mobile data traffic can thus only grow. Globally, data traffic has been forecast to grow four-fold from 2010 to 2015, with mobile data traffic as the fastest-growing segment.

M1 is well-placed to capture data growth in both the mobile and fixed segments. We will continue to build on our strong foundation and focus on delivering an even better experience to our customers as a full-service operator.

In 2011, M1 scored another first with the launch of South East Asia’s first commercial Long Term Evolution (LTE) network in June. More importantly, this next-generation mobile network enables us to deliver data several times faster and in a more cost-effective manner.

For our customers, it will mean an enriched wireless experience. Consumers will find activities like social networking a breeze with the uploading of pictures and videos in mere seconds, while corporate customers can enjoy high-bandwidth applications that previously could only be delivered through wired networks. It will also encourage greater innovation in mobile applications and services, such as cloud-based solutions and machine-to-machine communications.

In the fixed space, the rollout of Singapore’s Next Generation Nationwide Broadband Network (NGNBN) continues apace. While there have been some teething issues and installation delays in 2011, consumer and business interest in fibre remains high and we continue to enjoy strong take-up of our services which offer better performance and value. As the NGNBN rollout progresses, with an expected 95% coverage by June 2012, I am confident that we will continue to strengthen our market position and entrench M1 as the trusted operator in this segment.

2012 will likely see new developments in the pay-TV space. The Government’s regulation on mandatory cross-carriage of exclusive content came into effect in August 2011 and is expected to benefit consumers. This, together with the increasing popularity of Internet TV and the proposed introduction of open-access IPTV infrastructure, will open up opportunities for M1 to increase our household penetration.

Looking ahead, while global economic conditions are uncertain, there are positive growth prospects for M1. We will continue to invest in and strengthen our core competencies, innovate to stay ahead and evolve to support full convergence in this digital world.

Shareholder returns

M1 reported a full year net profit of S$164.1 million for 2011, up 4.5% from the year before.

The company has a proven history of providing attractive capital distribution to shareholders. The Board of Directors has proposed a final dividend of 7.9 cents for FY2011. Taken together with the interim dividend of 6.6 cents paid out in August last year, the total dividend of 14.5 cents for FY2011 represents a payout of 80% of our full-year net profit after tax.

In 2011, M1’s share price had performed well despite a volatile stock market, rising 6.4% against the benchmark Straits Times Index’s 17.0% fall. Taken together with the dividends paid, total shareholders’ return was a healthy 14.0% for the year.

M1 remains committed to enhancing long-term shareholder value, and will continue to pursue a sustainable capital distribution policy.

A note of thanks

I would like to express my thanks to our customers, shareholders, business partners, my fellow Board members, management and staff, for their support and hard work this past year.

With your continued effort, I am confident that M1 will make good progress in the new year, and continue to deliver value to our stakeholders.

Teo Soon Hoe

Chairman