M1 SHAREHOLDERS had much to cheer about after the telco announced a bumper cash payout and a surprise rise in its annual profits yesterday.
The mobile operator, the smallest in Singapore, is paying out a larger-than-expected $296 million in cash to its shareholders - yielding an investor holding 1,000 shares a $297 bonanza.
It also managed to surprise, somewhat, with a 2.2 per cent improvement in its bottom line, which clocked in at $164.6 million for the year ended Dec 31.
Revenues, however, slipped 0.7 per cent to $773 million.
The latest payout is the largest by M1 so far.
The telco is distributing a final dividend of 7.5 cents per share.
It is also conducting a capital reduction exercise in which it will buy back and cancel about 10 per cent of its share capital at $2.22 apiece.
In all, M1's total cash distribution for last year will amount to $353 million, including an interim dividend of 5.8 cents a share paid out earlier.
Analysts had expected a big cash distribution from M1, whose shares continue to find favour among investors banking on good dividend returns, rather than capital gains.
But they were caught out this time around as many were predicting a total distribution of 20 cents a share, or $200 million in aggregate.
The experts were also surprised by M1's resilient performance after the telco's own predictions of flat earnings.
After a weak showing in the first nine months of the year, the telco sprung back to life in the final quarter, registering a 7.6 per cent rise in quarterly profit to $39.8 million.
The telco added 88,000 customers in the quarter and saw its market share inch up to 28.5 per cent, from 28.4 per cent at end-August.
It also lost fewer customers as the churn rate fell to 1.3 per cent, from 1.5 per cent in the third quarter.
Looking ahead, M1 said operations should remain stable but declined to give specific guidance for the top line and the bottom line.
Chief executive Neil Montefiore said he is first waiting to see if the rapid uptake of M1's mobile broadband service will be sustained into the first quarter of this year.
The telco has signed up 10,000 customers for the new service, launched last month.
M1 is expecting to spend between $70 million and $100 million on its network while it continues to pledge that it will pay out at least 80 per cent of its profits in dividends.
Earnings per share were 16.6 cents, up from 16.4 cents the previous year. Net asset value per share fell to 38.6 cents from 47.1 cents a year ago.
M1 shares rose three cents yesterday to close at $2.29.
bryanlee@sph.com.sg
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