FY16 Results Presentation 24 January 2017
Forward looking statements Important note This presentation and the following discussion may contain forward looking statements by M1 Limited ( M1 ) relating to financial trends for future periods Some of the statements contained in this presentation or arising from this discussion which are not of historical facts are statements of future expectations with respect to financial conditions, results of operations and businesses, and related plans and objectives. Such forward looking statements are based on M1 s current views and assumptions including, but not limited to, prevailing economic and market conditions and currently available information. These statements involve known and unknown risks and uncertainties that could cause actual results, performance or achievements to differ materially from those in the forward looking statements. Such statements are not, and should not be construed, as a representation as to future performance or achievements of M1. In particular, such statements should not be regarded as a forecast or projection of future performance of M1. It should be noted that the actual performance or achievements of M1 may vary significantly from such statements. 1
Overview of FY2016 results Financial highlights For 2016 Service revenue was S$806m EBITDA margin at 38.7% of service revenue Net profit after tax declined 16.1% YoY to S$150m Mobile customer base increased 91,000 YoY to 2.02m Performance highlights for 2016 Mobile data revenue was 54.0% of service revenue Fibre customer base grew 32,000 YoY to 160,000 Fixed service revenue increased to 12.9% of service revenue Dividend Proposed final dividend of 5.9 cents per share 2
Agenda Financial highlights Performance highlights Outlook 3
Revenues (S$m) Service revenue (S$m) 209 203 204 197 201 822 806-8.3% FY2016 vs FY2015 308 +1.9% +26.0% 314 1,157 1,061 335 255 86 104 69 61 Handset sales Fixed services Handset sales (-23.7%): Lower sales volume and selling price Fixed services revenue (+21.4%): Higher fibre customer base 258 99 240 249 113 54 36 52 25 25 26 16 27 27 16 15 15 15 668 640 International call services Mobile services International call revenue (-10.8%): Lower retail traffic 168 163 163 155 158 Mobile revenue (-4.2%): Lower voice and roaming revenues 4
Cost of sales (S$m) 150 122 10 7 11 +11.3% 105 88 76 102 73 60 10 9 10 8 7 8 11 12 11-13.1% 531 462 +64.0% 419 167 344 135 39 39 11 34 33 10 11 38 45 Handset costs Traffic Expenses Other costs Wholesale costs of fixed services FY2016 vs FY2015 Handset costs (-17.9%): Lower sales volume and unit cost Wholesale costs of fixed services (+17.5%): Higher fibre customer base 5
Other operating expenses (S$m) 105 32 100 30 +4.4% 103 31 106 32 29 27 29 29 +3.6% 110 33 30 20 21 21 22 23 8 8 8 8 8 8 7 8 3 7 7 7 2 5 2 5 2 6 2 6 409 118 +2.5% 419 127 118 115 82 86 32 31 26 29 24 9 22 8 Depreciation & amortisation Staff costs Facilities expenses Leased circuit costs Other G&A expenses Advertising & promotion Doubtful debt provision FY2016 vs FY2015 Depreciation & amortisation expenses (+7.0%): Higher fixed asset base Facilities expenses (+5.3%): Higher network maintenance expenses 6
EBITDA & net profit after tax EBITDA margin (on service revenue) EBITDA (S$m) & margin on service revenue 42.2% 40.9% 40.3% 37.8% 35.8% 41.6% 38.7% PAT margin (on service revenue) Profit after tax (S$m) & margin on service revenue 20.8% 20.9% 20.1% 17.4% 15.8% 21.7% 18.6% -18.3% 342-8.7% 312-16.1% 179-3.4% -27.1% 150-7.5% 88 83 82 75 72 44 43 41 34 32 7
Capex & Cash flows Capex (S$m) Operating and free cash flows (S$m) Operating cash flow Free cash flow Spectrum rights payment 31 102 85 98 50 239 335 +22.6% / +83.2% +183.4% 64 +5.2% +39.5% / -87.5% -1.4% +55.1% 133 141 64 50 64 106 130 42 38 35 27 41 (11) 6 9 8
Financial leverage S$m FY2015 FY2016 Change Cash & cash equivalents 10.0 11.0 10.5% Net debt 343.8 390.0 13.4% Net assets 413.2 403.4-2.4% Net debt/equity (x) 0.8 1.0 16.2% Net debt/ebitda (x) 1.0 1.2 30.7% EBITDA/Interest (x) 69.5 46.2-33.5% Net assets per share (cents) 44.1 43.4-1.6% EPS - diluted (cents) 19.0 16.1-15.6% 9
Agenda Financial highlights Performance highlights Outlook 10
Mobile customers Postpaid customer base ( 000) Prepaid customer base ( 000) +52 1,195 1,208 1,222 1,232 1,247 +39 733 734 758 762 772 4Q15 1Q16 2Q16 3Q16 4Q16 4Q15 1Q16 2Q16 3Q16 4Q16 11
Postpaid mobile Postpaid mobile revenue (S$m) Postpaid monthly ARPU (S$) -3.6% ARPU allocated to handset sales -7.3% 591 570 +1.1% -6.0% -4.8% 61.6 59.9 61.7 58.6 56.5 57.1 58.0 +3.2% 149 145 145 138 142 53.8 51.7 51.6 48.3 49.5 54.2 50.3 12
Prepaid mobile Prepaid mobile revenue (S$m) Prepaid monthly ARPU (S$) -8.6% -17.9% -15.1% 77 70-4.2% -17.0% -6.9% 14.0 13.2 12.3 12.0 11.5 14.7 12.2 19 19 18 17 16 13
Mobile market share Overall market share* Postpaid & Prepaid market share* Postpaid 24.6% 24.6% 24.7% 24.7% 24.7% 23.4% 23.5% 23.7% 23.7% 23.7% 4Q15 1Q16 2Q16 3Q16 Oct-16 Prepaid 21.7% 21.8% 22.2% 22.1% 22.3% 4Q15 1Q16 2Q16 3Q16 Oct-16 4Q15 1Q16 2Q16 3Q16 Oct-16 * - Based on published statistics available at the time of submission 14
Postpaid mobile Acquisition cost per postpaid customer (S$) Monthly churn rate (postpaid) +10.1% +22.7% 438 +1.7% 398 321 329 357 363 369 1.1% 1.0% 0.9% 0.9% 1.2% 1.0% 1.0% Note: Cash basis 15
Tiered data plans & mobile data contribution Tiered data plans Data contribution to mobile service revenue Postpaid customers on tiered data plans Percentage of tiered data plan customers exceeding primary data bundles 25% 24% 25% 26% 28% 51.2% 53.1% 54.0% 54.2% 54.8% 54.0% 46.3% 74% 74% 75% 76% 77% 4Q15 1Q16 2Q16 3Q16 4Q16 16
Fixed services Fibre customer base ( 000) Fibre monthly ARPU (S$) +32-9.3% 128 136 145 152 160 47.5 46.9 45.1 45.7-5.7% -3.4% 43.1 46.7 45.1 4Q15 1Q16 2Q16 3Q16 4Q16 17
International call services International retail minutes (million mins) International call services revenue (S$m) -14.3% 813 +0.7% 696-10.8% +6.7% -3.2% 69 61 +3.7% 186 172 162 175 187 16 16 15 15 15 18
Agenda Financial highlights Performance highlights Outlook 19
Opportunities and strategy Internet-based ecosystems Opportunities Growing IoT services Smart nation Strengthen telco core Continual investments: 4.5G/5G, HetNet and NB-IoT Expand reach of fibre infrastructure to corporates Strategy Digitisation of operations Improve efficiency and time-to-market Build ICT and digital solutions Focus on verticals such as transportation, retail, finance and smart nation initiatives Enhance with data analytics Managed cloud services and cyber security offerings 20
Outlook and estimates Outlook & estimates for FY2017 Opportunities exist amidst challenging environment Build on strong foundation and invest ahead New services will take time to scale Capex to be around S$170m Dividend policy Maintain at least 80% payout ratio 21
Thank you 22