Financial Review
OPERATING REVENUE
|
Year Ended 31 December |
|||
|
2011 |
2010 |
YoY |
|
S$’m |
S$’m |
Change |
|
Operating revenue |
|||
Mobile telecommunications |
587.4 |
579.4 |
1.4% |
International call services |
124.8 |
129.0 |
-3.2% |
|
Fixed services |
38.3 |
24.5 |
56.2% |
Total service revenue |
750.5 |
732.9 |
2.4% |
|
Handset sales |
314.4 |
246.3 |
27.6% |
|
Total |
1,064.9 |
979.2 |
8.8% |
For 2011, M1’s operating revenue grew 8.8% to S$1,064.9 million. Service revenue grew 2.4% to S$750.5 million, driven by higher revenue from fixed services, which grew 56.2%.
The following are more details from each segment:
MOBILE TELECOMMUNICATIONS
|
Year Ended 31 December |
|||
|
2011 |
2010 |
YoY |
|
S$’m |
S$’m |
Change |
|
Mobile telecommunications revenue |
|||
Postpaid |
509.3 |
502.0 |
1.4% |
|
Prepaid |
78.1 |
77.3 |
0.9% |
|
Total |
587.4 |
579.4 |
1.4% |
Average revenue per user (ARPU, S$ per month) |
|||
Postpaid |
S$63.8 |
S$63.9 |
-0.3% |
Postpaid (adjusted) 1 |
S$54.6 |
S$59.8 |
-8.7% |
Data plan |
S$22.2 |
S$21.5 |
3.6% |
Prepaid |
S$13.7 |
S$14.5 |
-5.2% |
|
Non-voice services as a % of service revenue |
35.6% |
31.9% |
|
1 After adjustment for ARPU offset against handset subsidy
Mobile telecommunications revenue increased 1.4% to S$587.4 million. Segmentally, postpaid revenue increased 1.4% to S$509.3 million, while prepaid revenue increased 0.9% to S$78.1m, as a result of an enlarged customer base.
Non-voice services as a percentage of service revenue increased 3.7% points to 35.6%, compared to 31.9%, driven by higher mobile data revenue from increased take-up of smartphones and mobile broadband devices.
INTERNATIONAL CALL SERVICES
|
Year Ended 31 December |
|||
|
2011 |
2010 |
YoY |
|
S$’m |
S$’m |
Change |
|
International call services revenue |
|||
Retail revenue |
115.3 |
118.5 |
-2.7% |
|
Wholesale & bilateral revenue |
9.6 |
10.5 |
-8.4% |
|
Total |
124.8 |
129.0 |
-3.2% |
|
Total international retail minutes (in millions) |
1,165 |
957 |
21.7% |
International call services revenue decreased 3.2% to S$124.8 million due to higher proportion of traffic to lower rated destinations as a result of promotional offers.
HANDSET SALES
Handset sales increased 27.6% to S$314.4 million, driven by higher smartphone sales.
OPERATING EXPENSES
|
Year Ended 31 December |
|||
|
2011 |
2010 |
YoY |
|
S$’m |
S$’m |
Change |
|
Cost of sales |
565.6 |
492.2 |
14.9% |
Staff costs |
96.9 |
89.1 |
8.7% |
Advertising & promotion |
26.5 |
26.1 |
1.4% |
Depreciation & amortisation |
107.1 |
117.0 |
-8.5% |
Allowance for bad & doubtful debt |
17.1 |
14.8 |
16.0% |
Facilities expenses |
36.9 |
30.2 |
22.3% |
|
Other general & administrative expenses |
13.2 |
15.8 |
-16.3% |
|
Total |
863.3 |
785.2 |
10.0% |
Operating expenses increased 10.0% to S$863.3 million mainly due to higher cost of sales, partially offset by lower depreciation and amortisation and other general and administrative expenses.
COST OF SALES
|
Year Ended 31 December |
|||
|
2011 |
2010 |
YoY |
|
S$’m |
S$’m |
Change |
|
Handset costs |
359.6 |
297.1 |
21.1% |
Traffic expenses |
64.5 |
59.1 |
9.1% |
Leased circuit costs |
33.9 |
41.4 |
-18.0% |
Wholesale costs of fixed services |
22.8 |
13.2 |
73.4% |
|
Other costs |
84.7 |
81.4 |
4.0% |
|
Total |
565.6 |
492.2 |
14.9% |
Cost of sales increased 14.9% to S$565.6 million mainly due to higher handset costs. Handset costs increased 21.1% to S$359.6 million on the back of higher sales volume and average unit cost. Leased circuit costs were lower at S$33.9 million as traffic was cut over from leased lines to our backhaul transmission network. Wholesale costs of fixed services increased to S$22.8 million as a result of growth in customer base.
STAFF COSTS
Staff costs increased 8.7% to S$96.9 million mainly due to incremental headcount to support fixed services and increased retail activities.
ADVERTISING AND PROMOTION EXPENSES
Advertising and promotion expenses increased 1.4% to S$26.5 million, as full year promotions for fixed services were incurred during the year.
DEPRECIATION AND AMORTISATION
Depreciation and amortisation expenses fell 8.5% to S$107.1 million as some assets were fully depreciated.
ALLOWANCE FOR BAD AND DOUBTFUL DEBT
Doubtful debt allowance increased 16% to S$17.1 million mainly due to provision made on higher service revenue.
FACILITIES EXPENSES
Facilities expenses increased 22.3% to S$36.9 million due to higher maintenance expenses as warranty periods for major assets expired.
OTHER GENERAL AND ADMINISTRATIVE EXPENSES
Other general and administrative expenses benefited from exchange gain and decreased 16.3% to S$13.2 million.
FINANCE COSTS
Finance costs increased 1.9% to S$6.0 million due to higher short-term borrowings during the year.
NET PROFIT
|
Year Ended 31 December |
|||
|
2011 |
2010 |
YoY |
|
S$’m |
S$’m |
Change |
|
Net profit |
164.1 |
157.1 |
4.5% |
|
Net profit margin (on service revenue) |
21.9% |
21.4% |
|
Net profit at S$164.1 million was 4.5% higher while net profit margin rose 0.5% point to 21.9%.
EBITDA
|
Year Ended 31 December |
|||
|
2011 |
2010 |
YoY |
|
S$’m |
S$’m |
Change |
|
EBITDA |
310.4 |
313.3 |
-0.9% |
|
EBITDA margin (on service revenue) |
41.4% |
42.8% |
|
EBITDA decreased 0.9% to S$310.4 million due to higher operating expenses.
EBITDA margin, as a percentage of service revenue, was lower at 41.4%.
CAPITAL EXPENDITURE AND COMMITMENTS
Capital expenditure incurred for 2011 was S$102.5m as compared to S$99.9m for 2010.
Capital commitment as at 31 December 2011 was S$40.8m.
LIQUIDITY AND CAPITAL RESOURCES
|
Year Ended 31 December |
|||
|
2011 |
2010 |
YoY |
|
S$’m |
S$’m |
Change |
|
Profit before tax |
197.4 |
190.5 |
3.6% |
Non-cash item and net interest expense adjustments |
73.7 |
80.7 |
-8.7% |
|
Net change in working capital |
14.5 |
(83.8) |
117.3% |
Net cash provided by operating activities |
285.6 |
187.4 |
52.4% |
Net cash used in investing activities |
(124.2) |
(120.3) |
3.2% |
|
Net cash used in financing activities |
(158.3) |
(65.7) |
140.9% |
Net change in cash and cash equivalents |
3.1 |
1.4 |
120.6% |
|
Cash and cash equivalents at beginning of financial period |
8.8 |
7.4 |
18.1% |
Cash and cash equivalents at end of financial period |
11.8 |
8.8 |
34.8% |
|
Free cash flow1 |
161.3 |
67.5 |
139.0% |
1 Free cash flow refers to net cash provided by operating activities less current year capital expenditure and payment for spectrum rights
Operating cash flow increased 52.4% to S$285.6 million mainly due to lower working capital requirements. As a result, free cash flow at S$161.3 million for 2011 was 139.0% higher than the previous year.
FINANCIAL LEVERAGE
As at end December 2011, M1’s gearing ratio was 90.3% compared to 101.4% as at end December 2010. Interest coverage ratio (EBITDA/Interest) was 52.1x for 2011, lower than 53.6x for 2010.