Why M1’s strong fixed broadband won’t move the needle for its profits
Unless it captures 20% of market share. If the fixed broadband segment is to be looked at, M1 appears to be thriving, with its fibre customers growing to 168,000 in Q1. According to DBS Group Research, M1 has grown its market share in this segment from 0 to 12% in just five years. However, whilst this growth is encouraging, it will not be able to make a sizeable difference to its bottom line, which is constantly badgered by lower mobile revenues.
“Broadband accounted for only 15% of M1’s revenue in 1Q17 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, “We believe the company could see decent growth till its fixed broadband market share reaches close to 20%.”
To recall, M1’s net profit fell 14.6% YoY to $36.3m in the past quarter.