Here's a quick check why M1's iPhone 5 plan is the best value buy

M1 reported 6.0% q-q decline in 3Q net profits but iPhone revenues will give a boost, says PhillipCapital.

With the popularity of the iPhone 5 and other smartphones, management expects higher acquisition cost in the 4th
quarter.

According to PhillipCapital, these upfront expenses from the handset subsidies decrease current quarter’s EBITDA, but will nonetheless be recognised in the next few quarters.

Here's more from PhillipCapital

We expect large orders of iPhone 5 to continue in 4Q12. With the cheaper iPhones selling price as per Table 1 below, we calculate M1’s revenue to be an average of S$63 to S$76 lesser per phone compared to Starhub and SingTel respectively.

Assuming the cost price to be the same as those of its peers, this implies a higher subsidy per phone, and higher expenses recognised upfront due to the lower selling price. This is however likely partially offset due to
M1’s different accounting treatment of recognising a portion of the revenue upfront. The higher subsidies given to M1’s customers are however likely to further increase post-paid customer base and reduce churn rate.

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