M1

UOBKayhian on 23 June 2014


FY14F PE (x): 19.7
FY15F PE (x): 18.4
Adjusting pricing for mobile services higher. M1 has raised its pricing for mobile
services with effect from 1 Jan 14:
a) M1 has imposed a minimum charge of one minute per call for mobile services. The
change in pricing applies to M1’s entire post-paid subscriber base. It is the last among
the three telcos to impose the minimum charge.
b) M1 has raised excess charges for data from S$5.35/GB to S$10.70/GB. The cap on
excess charges was also lifted from S$94.16 to S$188.32/month. The new pricing will
come into effect upon customers re-contracting.
Anticipates moderate growth in 2014. Management guided moderate single-digit
growth for net profit in 2014. Capex is estimated at S$130m for 2014. M1 is scheduled
to complete the upgrade of its 4G network to LTE Advance by end-14. M1 will
overhaul its billing and customer care system to handle customers with multiple
services. It will retrofit a second building (leased) at International Business Park, which
also houses a data centre.
Re-iterate BUY. We have raised our target price for M1 from S$3.89 to S$4.05 based
on DCF (required rate of return: 6.7%, terminal growth: 1.0%).