M1 mobile revenues dip 1.7% QoQ

CIMB forecasts 2Q12 earnings to shrink by 11% yoy.

According to CIMB, mobile revenues dipped in 1Q12, by 1.7% qoq, part of seasonality. "We expect growth to resume in 2Q12, with the aid of: 1) more working days; 2) the adoption of smartphones; and 3) data take-up. As voice and SMS get replaced by data, data monetisation will be instrumental in lifting ARPUs."

Here's more from CIMB:

We expect M1’s 2Q earnings to contract 11% yoy but rise as much as 7% qoq to S$38m-43m. Revenue growth is expected from stronger service revenue and higher handset sales (driven by Android). Meanwhile, EBITDA margins could soften due M1’s handset-subsidy accounting treatment whereby the cost of Samsung Galaxy S is expensed immediately while iPhone costs are amortised over the life of subscribers’ contracts. M1’s 2Q12 results will bereleased on 16 Jul.

Things to look out for include:

Service revenue after the seasonally slower 1Q
More clarity on capex from the regulator’s plans to boost service quality
Updates on fibre trends and its campaign to improve scale and capture market share from a low base
Any updates on LTE.

We do not expect higher dividends since it is fairly geared and outlay would be needed for the bidding and payment of 4G spectrum in 1H13. Catalysts that might trigger a re-rating are: 1) higher prices for its data plans and 2) a resolution of matters with NGNBN.

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