Guess how much M1 will shell out for mobile coverage expansion

It aims to get 100,000 users.

According to OCBC, M1 Ltd reported its 4Q12 results. While revenue of S$327.4m (+3.2% YoY, +28.5% QoQ) was 5.0% ahead of the firm's forecast, aided by higher handset sales of the new iPhone 5 and new Samsung Note 2, net profit of S$37.9m (flat YoY, +14.5% QoQ) was 11.7% below OCBC's estimate.

This was mainly due to higher-than-expected tax expense of S$11.8m (+78.8% YoY. +63.9% QoQ) arising from prior years’ under-provision of deferred taxation.

For FY12, revenue came in at S$1076.8m, or 1.5% above the firm's number, while net profit of S$146.5m was 3.3% below. M1 declared a final dividend of S$0.063/share and a special dividend of S$0.017/share, bringing the total full-year dividend to S$0.146 (versus S$0.145).

Here's more from OCBC:

Going forward, management expects to see moderate earnings growth in 2013, aided by continued strong take-up of 4G services, where it already has 146k 4G subscribers as of end-2012, thanks to its faster 4G roll-out across the island compared to its peers; uplift from its new tiered pricing plans.

Management also cites a likely acceleration of fiber adoption as a driver as margin will improve with scale – M1 currently has close to 52k NBN customers as of end 2012; company believes that it can hit optimal efficiency with 100k users.

Meanwhile, M1 will spend some S$130-150m capex to expand its mobile coverage and capacity (partly due to new QoS imposed by IDA). It also maintains a minimum 80% dividend payout ratio.

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