Axiata Group Berhad - Annual Report 2016

50 / 284

Axiata Group Berhad | Annual Report 2016 OPERATING COMPANIES BUSINESS REVIEW 048
Financial Performance
In 2016, M1’s operating revenue decreased 8.3%
Year on Year (YoY) to SGD1,060.9 million due to
lower handset sales. Service revenue decreased
2.0% to SGD805.5 million, as a result of lower
international call services and roaming revenues.
Mobile data revenue increased 7.7 percentage
points YoY to 54.0% of service revenue.
NPAT decreased 16.1% YoY to SGD149.7 million,
due to lower international call and roaming
revenues, higher handset subsidy, as well as
higher depreciation and amortisation expenses.
NPAT margin on service revenue closed 3.1
percentage points lower at 18.6%. Free cash
flow increased 22.6% to SGD129.6 million and
net debt-to-EBITDA remained healthy at 1.2
times.
Outlook for 2017
Market conditions will remain challenging
in 2017. Traditional telecommunications will
continue to be impacted by OTT services while
global economic conditions remain uncertain.
The Company expects competition within the
telecommunications sector to remain intense,
ahead of the entry of a fourth mobile network
operator in Singapore in 2018.
In spite of these challenges, consumers and
businesses alike appreciate the benefits of
connectivity and this will drive continued growth
in mobile data and fixed services through 2017.
M1 is also seeing emerging opportunities in
areas such as Internet of Things (IoT), Smart
Cities and Data Analytics, and these will grow
as the technologies and business models that
underpin them gain greater traction.
As a forward looking company, M1 has been
investing and innovating in anticipation of
these developments by strengthening its
core connectivity infrastructure and services,
building its digital capabilities, and enhancing
its operational structure. Through these efforts,
M1 is well on its way to becoming Singapore’s
Smart Communications Provider of choice, with
products and services that are relevant and serve
present, as well as future customers’ needs.
REVENUE
1,157.2 1,060.9
2015 2016
-8.3%
EBITDA & EBITDA
MARGIN (%)1
41.6% 38.7%
341.8 312.1
2015 2016
SGD Million SGD Million
PAT2
178.5 149.7
2015 2016
SUBSCRIBERS
2.06 2.18
2015 2016
+5.8% -16.1%
SGD Million Million
Within the corporate segment, M1was appointed
by Ascendas-Singbridge for Singapore’s largest
fibre upgrading project to install and enhance
telecommunication and fibre infrastructure at 70
Ascendas-Singbridge commercial buildings. The
first completed site situated along Singapore
Science Park was announced in November 2016.
Throughout 2016, the Company made available
a range of new products and services within
both the residential and corporate segments.
This included the next generation Hosted
Unified Communications (UC) solution offering
integrated modern business tools, Smart Activity
Monitoring Service to support vulnerable senior
citizens, contactless transit payments via a
partnership with EZ-Link Pte Ltd, an affordably
priced SOHO Fibre Broadband plan, a 1Gbps
M1 Fibre Sports Bundle and the Cyber Security
Solutions Suite offering a comprehensive suite
of enterprise-grade managed cybersecurity
solutions.
To augment its growth, M1’s 13 shop outlets
continued to provide customers with convenient
access to its products and services while
its e-Shop recorded an increase in online
transactions.
New brand campaigns were rolled out during
the year which increased brand awareness
and perception in the marketplace. M1 also
continued to strengthen customer experience
across all touch points, such as the enhanced My
M1 app which provides customers near real-time
access to their voice, messaging and data usage
information. As a result of its sustained efforts to
better serve its customers, the Company topped
the Customer Satisfaction Index of Singapore
for 2016 in the residential broadband segment.
Since inception, M1 has invested more than
SGD1.9 billion into its fixed and mobile networks.
Key initiatives in 2016 include a 4.5G speed trial
which demonstrated Southeast Asia’s fastest
combined upload and download speeds,
launching Singapore’s first WiFi-On-The-Go
service on selected SMRT vehicles as part of
the national Heterogeneous Network (HetNet)
trials, Singapore’s first nationwide commercial
narrowband Internet of Things (NB-IoT) network
deployment, and the roll out of Singapore’s first
nationwide HetNet which is an integral part of
M1’s 5G network roadmap.
M1
BUSINESS REVIEW
1 & 2 EBIDTA Margin and PAT is derived as a percentage
of service revenue