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M1 Q3 2012 Results–Subsidies on the Rise

M1 announced their Q3 2012 results today.

Presentation slides here and financial report here.

The results look bad from a profit point of view, mostly due to higher handset subsidies. This will eventually filter back in cash flows in later quarters.

The free cash flow in the slides look better due to a better receivables and higher payables. Not exactly what we are looking for.

To pay a 130 mil dividend, free cash flow looks pretty tight.  M1 usually pays out like 80% of its full year income. I am projecting full year income around 130-140 mil.

Perhaps they can only pay out 100 mil as dividends

Free cash flow wise I believe full year could hit 140 mil. That would be able to pay for the dividends. (this is taking into account 120 mil of forecast capex)

Some negative stats is that on slide 14, there is a 15% climb in post paid customer acquisition cost. Slide 15 post paid ARPU looks to be veering downwards.

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hawshy

Wednesday 17th of October 2012

HI Drizzt, will the cut in data cap help in generating more revenue?

Drizzt

Wednesday 17th of October 2012

hi hawshy,

i think it will but whether it really improves the profits i am not sure. many are still within the 2gb limits

lulu

Monday 15th of October 2012

managed to pick out only the subsidies & FCF only.. thanks for the analysis..

Drizzt

Tuesday 16th of October 2012

hi LuLu, what you mean? sorry my analysis has to be short, because i don't see much changes for the rest. telcos do find it hard to grow.

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