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M1 sees 21.8% drop in marketing spend year-on-year

M1 has revealed a 21.8% decrease in advertising and promotion expenses year-on-year (yoy) due to lower marketing activities. This was down from SG$6.3 million in 2016 in the same quarter, to SG$4.9 million this year. Meanwhile, marketing spend dropped 2.8% quarter on quarter.

This was according to the group’s unaudited group financial results for the nine months ending 30 September 2017.  The report added that total mobile customer base was 2.01 million as of end-September 2017.

In a conversation with Marketing, Ivan Lim, director, corporate communications and investor relations at M1, explained that the year-on-year decline in advertising and promotion expenses for third quarter 2017 was mainly due to timing issues. Historically, marketing spend has been relatively stable for the full year, he added.

“We are addressing the shift in consumer preferences towards data-centric services through proactive customer service management, network optimisation and upgrades, as well as innovative and competitive price service propositions such as the launch of our latest mySIM3 and mySIMe  plans,” Lim said.

For the third quarter of 2017, service revenue increased 4.9% yoy to SG$206.7 million. This was mainly driven by higher post-paid and fixed services revenues which saw a growth of 5.5% and 19.9% respectively yoy. Earnings before interest, tax, depreciation and amortisation increased 1.3% yoy to SG$75.5 million.

Meanwhile, net profit after tax declined 4.8% yoy to SG$32.7 million. This was primarily due to higher depreciation and interest expenses. Fixed services revenue increased 21.4% yoy to SG$93.6 million. This accounted for 15.3% of overall service revenue. Mobile data revenue also increased 1.7% yoy to 55.9% of service revenue in the latest quarter.

Growth in customer base

According to the report, M1’s fibre customer base grew 6,000, bringing total fibre customer base to 182,000. The company also conducted a review of its entire mobile customer base following the 2G network shutdown in Q2 this year.

The move saw the termination of inactive and dormant customers, as well as migration of customers to its machine-to-machine platform, who are not included in the reported customer base. This accounted for a reduction of 14,000 postpaid and 47,000 prepaid customers. As a result, postpaid customer base increased 5,000 and prepaid customer base decreased 41,000 in the third quarter of 2017.

According to an investor presentation, M1 said that competition likely to pick up with impending entry of new mobile network operators. The company also said there were changes in consumer preferences from traditional telecommunications to data centric services.

As such, it is looking to engage in more proactive customer service management. This includes network optimisation and upgrades through small cells or WiFi HetNet deployment and enhanced video streaming experiences for its customers.

It is also eyeing innovative and competitively priced service propositions such as network-based mobile malware detection solutions as well as postpaid and prepaid data centric plans. In addition, it is looking at expanded ICT solutions with value added services. This is through managed infrastructure, cloud-based cyber security solutions and data analytics.

“With the shift in consumer preferences from traditional telecommunications to data centric services, we are addressing their changing needs through proactive customer service management, network optimisation and upgrades, as well as innovative and competitively priced service propositions,” Karen Kooi, CEO of M1, said.

In September this year, the company called for a closed door creative pitch. The move was confirmed to Marketing by a M1 spokesperson. The incumbent on the account is Y&R Singapore, which was first appointed in 2008.Last August, M1 reappointed Zenith Singapore as its media agency, following a media review called earlier last year.

Read also: M1 shows its cheeky side in latest ad campaign

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