Fixed broadband sparks hope for M1

But it is unlikely to offset losses in the mobile segment.

Analysts from OCBC Investment Research and DBS Vickers Securities believe that M1's bright spot is its fixed services segment. It is actually seeing a healthy growth in the sector at the expense of incumbents.

However, they also believe that while the growth from the said segment is encouraging, it remains not material.

"Fixed services segment remains the only bright spot but unlikely to offset the weak mobile segment outlook," OCBC Investment Research said.

While data usage has increased to 3.6GB/month in 4Q16 from 3.3GB a year ago, OCBC argued that data revenue growth will be moderated by competitively priced data offerings, especially with the new telco TPG coming into the picture.

Meanwhile, DBS said the company could see decent growth till its fixed broadband market share reaches 20%.

"In addition, broadband pricing is seeing some stabilisation. However, broadband accounted for only 13.5% of M1's revenue in 4Q16 and EBITDA margins tend to be lower than the mobile business. As such, the impact on M1’s bottomline is likely to be limited," DBS said.

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