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THOMSON REUTERS
FINAL TRANSCRIPT
Full Year 2017 M1 Limited Earnings Call
EVENT DATE/TIME: 01/23/2018 09:30 AM GMT
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CORPORATE PARTICIPANTS
Ivan Lim M1 Limited - Director of Corporate Communications & IR
Kok Chew Lee M1 Limited - CFO & Chief Commercial Officer
Poopalasingam Subramaniam M1 Limited - CMO
Denis Seek M1 Limited - CTO
CONFERENCE CALL PARTICIPANTS
Arthur Pineda Citigroup Inc, Research Division - Director and Head of Pan-Asian Telecommunications Research
Choong Chen Foong CIMB Research - Analyst
Gopakumar Pullaikodi Nomura Securities Co. Ltd., Research Division - Regional Head of Telecommunications Research
June Supapannachart Goldman Sachs Group Inc., Research Division - Research Analyst
Luis A. Hilado Maybank Kim Eng Holdings Limited, Research Division - Senior Research Analyst
Prem Jearajasingam Macquarie Research - Analyst
Ramakrishna Maruvada Daiwa Securities Co. Ltd., Research Division - Head of Singapore Research
Roshan Raj Behera BofA Merrill Lynch, Research Division - Analyst
Sachin Mittal DBS Vickers Research - Research Analyst
Srinivas Rao Deutsche Bank AG, Research Division - Research Analyst
Annabeth Leow
PRESENTATION
Operator
Good day, and welcome to the M1 2017 Full Year Financial Results Presentation and Q&A Session Conference Call. Today's conference is
being recorded.
At this time, I would like to turn the conference over to Ivan Lim, Director, Corporate Communications and Investor Relations. Please go
ahead, sir.
Ivan Lim M1 Limited - Director of Corporate Communications & IR
Hello, everyone. A warm welcome to our results -- full year results conference call. Today, our presenters are CFO, Kok Chew; and CMO,
Subra. Also in attendance are CEO, Karen; COO, Patrick; CTO, Denis; and CIO, Alan.
The result materials have been emailed to you, you can also access them through our website or SGX website. We will start with Kok Chew
on the overview, followed by financial highlights. And then onwards to Subra on performance highlights, and back to Kok Chew again on
outlook for 2018. After that, we will open the line for questions.
With that, I'd now like to hand over to Kok Chew.
Kok Chew Lee M1 Limited - CFO & Chief Commercial Officer
Thank you, Ivan. On Slide 2, on overview. So for the year ended 2017, service revenue increased 2.8% year-on-year to $828 million. Fixed
services revenue grew 24.5% year-on-year to $130 million. EBITDA was at 3.1% lower year-on-year at $302 million, mainly due to higher
handset loss.
Net profit after tax declined 11.5% year-on-year to $133 million as a result of higher depreciation and amortization, interest expense and FY
2016 benefited from a writeback of overprovision for tax. Mobile services revenue was stable for full year 2017. Contribution from mobile
data increased to 55.7% of service revenue, up from 54% a year ago. Postpaid customer base increased 45,000 during the year to 1.3 million.
Fixed services grew 24.5% year-on-year and accounted for 15.7% of service revenue in the latest quarter, compared to 12.9% a year ago.
Fibre customer base increased 29,000 year-on-year to 189,000. The Corporate segment now make up around 10% of fixed customer base and
contributed 50% service -- fixed services revenue in the fourth quarter. A final dividend of $0.062 per share based on 80% payout has been
proposed, this takes the full year total dividend to $0.114.
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Let's turn to Slide 4 on revenues. For the year ended 2017, operating revenue increased 1% year-on-year to $1.07 billion due to higher fixed
services revenue. Service revenue continued its quarterly growth trend to end the year at $828 million, 2.8% higher year-on-year.
On a segmental basis, mobile revenue was 0.4% higher year-on-year at $642 million, driven by higher postpaid revenue. International call
services revenue was 8.9% lower year-on-year at $56 million due to lower retail revenue. Fixed services revenue increased 24.5%
year-on-year to $130 million driven by higher customer base and contribution from Corporate segment projects. Handset sales decreased
4.9% year-on-year to $243 million due to lower sales volume and selling price.
Move on to Slide 5, cost of sales. Cost of sales increased 2.2% year-on-year for the full year to $472 million, mainly due to higher wholesale
cost of fixed services. Handset cost decreased 1.2% year-on-year to $340 million due to lower sales volume. Wholesale costs of fixed
services increased 24.4% year-on-year to $56 million, driven by higher customer base. Other costs increased 10.9% to $37 million, mainly
due to higher project costs related to large projects secured during the year.
Slide 6, for the year ended 2017, other operating expenses increased 2.2% year-on-year to $428 million. Staff costs increased 6.6%
year-on-year to $123 million due to salary increment and bonus payout. Depreciation and amortization expenses increased 2.5% year-on-year
to $130 million as a result of higher fixed asset base. Interest expense increased 46.5% to $9.9 million due to higher borrowings and interest
rates.
Slide 7, EBITDA for the full year was $302 million, and EBITDA margin was 36.5%. Profit after tax for the full year decreased 11.5% to
$133 million, and margin of service revenue closed at 16%.
CapEx and cash flows. For the full year 2017, CapEx increased $10 million to $151 million due to higher investments in network and IT
systems. Full year operating cash flow decreased $76 million to $259 million due to working capital changes. Accordingly, free cash flow
was lower at $107 million.
Slide 9, financial leverage. As at end December 2017, net gearing and net-debt-to-EBITDA were 0.9x and 1.3x, respectively.
I'll hand you all to Subra now.
Poopalasingam Subramaniam M1 Limited - CMO
Starting with Slide 11 on mobile customers. For fourth quarter 2017, postpaid customer base grew by 20,000 quarter-on-quarter to 1.29
million, driven by the take-up of SIM-only plans and contribution from MVNO. Prepaid customer base grew by 11,000 to 747,000, driven by
year-end promotions.
Slide 12. For the latest quarter, postpaid revenue increased 3.5% quarter-on-quarter to $151 million due to increased subscription revenue
from the take-up of higher-end plans and higher take-up of Data Passport services. Wholesale revenue from MVNO also contributed to the
higher revenue. ARPU increased 1.8% quarter-on-quarter to $56.40.
Prepaid mobile, slide 13. Prepaid revenue for fourth quarter 2017 decreased 4.2% quarter-on-quarter to $15 million, mainly due to the decline
in voice usage. Prepaid ARPU remained stable quarter-on-quarter at $10.50. Market share, based on published data as at end November,
postpaid market share was 25.2% and prepaid market share was 22%.
On Slide 15 now, for the latest quarter, acquisition cost increased 8% year-on-year to $473 due to the launch of high-end devices and take-up
of higher-end plans. Postpaid monthly churn decreased quarter-on-quarter to 1.2%.
Slide 16. As at December, postpaid customers on tiered data plans was 81%. Overall, 31% of the base exceeded their primary plan bundles
and 12% exceeded their total bundle. Average postpaid data usage continued to grow to 4.3 GB per month compared to 3.6 GB per month a
year ago. Mobile data revenue contributed to 56.1% of service revenue in the latest quarter.
Slide 17, as at end December 2017, our fibre customer base increased 7,000 during the quarter to 189,000. Fiber ARPU for the quarter
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increased quarter-on-quarter to $45, driven mainly by the take-up of higher-end residential plans. For the year ended 2017, retail traffic
decreased 9.4% year-on-year to 631 million minutes. Year-on-year international call services revenue decreased 8.9% to $56 million.
Quarter-on-quarter, International call services revenue remained stable at $14 million.
I hand you back to Kok Chew.
Kok Chew Lee M1 Limited - CFO & Chief Commercial Officer
Thank you, Subra. I'm on Slide #20 on outlook. As we transform to a smart communications provider, we are progressively scaling up our
ICT capabilities and solutions on top of connectivity to capture opportunities in the IoT and Smart Nation.
At the same time, we are also expanding our portfolio of digital services. For digitization, including increased cloudification, will improve
operational efficiency and enhance our customer touch points, providing a seamless experience for digital natives and tech-savvy segments.
To attract and retain customers, we are committed to deliver superior experience across all touch points, build on scaled-up digital
capabilities. In enhancing our products and services, we aim to introduce more innovative and unique offerings, such as our highly popular
Data Passport service.
We also constantly look at ways to improve our value proposition to cater to customers' evolving needs, such as moving from voice to more
data-centric plans. On networks, we continue to invest in upgrades and new technologies to ensure superior network quality.
Slide 21. As our network evolves, we continue to pursue cost-effective network enhancements, with optimal spectrum utilization. The
continuing deployment of small cells and WiFi sites will help augment network capacity at traffic hotspots. In doing so, we can reuse
existing frequency and avoid costly antenna upgrade costs.
In addition, it will also work on customers' existing devices and negate the need to change. This approach will also form the foundation for
future 5G dense grid architecture. We plan to leapfrog to 5G and avoid costly intermediate upgrades.
On network sharing, we continue to explore deeper collaboration. At present, we have expanded the collaboration from common antenna
solution to joint upgrading of 4.5G indoor antenna systems at large buildings.
For 2018, we are estimating a lower CapEx of around $120 million. On dividend policy, we propose to maintain 80% payout ratio.
I'll now hand you back to Ivan.
Ivan Lim M1 Limited - Director of Corporate Communications & IR
Thank you, Kok Chew. Thank you, Subra. We shall now proceed to the Q&A session. Marguerite, can we open the line for questions,
please?
QUESTIONS AND ANSWERS
Operator
(Operator Instructions) And we will now take our first question from Gopakumar from Nomura.
Gopakumar Pullaikodi Nomura Securities Co. Ltd., Research Division - Regional Head of Telecommunications Research
I have a few questions. Firstly, on the outlook, is it possible to give any quantitative color in terms of the revenue or EBITDA growth that
you're expecting for 2018? And on the CapEx, so you said that you expect CapEx to drop to $120 million, this compares to $151 million you
spent in 2017. So that seems to be a pretty sharp drop. May I know what is driving this? That's on outlook. Secondly, on the fixed line
business, was there any onetime revenue that you booked in 4Q? Or should we expect the current growth to continue? And last question, on
the mobile side, is it possible to give any disclosure in terms of the contribution from Circles.Life-only subscribers or revenues for the mobile
segment?
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Kok Chew Lee M1 Limited - CFO & Chief Commercial Officer
So to address your questions, perhaps not in order. On the mobile side, your question about contribution from Circles.Life, unfortunately, we
are bound by confidentiality agreement between us and Circles.Life, to disclose the information that you requested. What I can say is, they
add to our customer base, they contributed positively to our revenue and to our earnings. On the fixed revenue, your question about onetime
revenue. Last year, we secured quite a few projects, multiyear projects, with revenue that we accrued or recognized in the year-end. These --
some of these projects extend -- these multiyear projects extend to next year as well. But, however, as in all such projects, the nature of such
projects, sometimes the revenue can be lumpy when it comes to recognition. CapEx, your question about CapEx on -- from the $150 million
that we saw in 2017 and we are estimating a lower CapEx of $120 million this year now. Last year, in the CapEx, we also included some of
the project expenses, CapEx required in delivering some of these major projects that we have secured as well. And yes, so that roughly
explains the lower CapEx.
Gopakumar Pullaikodi Nomura Securities Co. Ltd., Research Division - Regional Head of Telecommunications Research
I had one more question on the outlook. Is it possible to give any quantitative color on the growth that you're expecting for 2018 on revenue,
EBITDA or profitability?
Kok Chew Lee M1 Limited - CFO & Chief Commercial Officer
At this point, I think it's too early for us to provide quantitative estimates on revenue and EBITDA growth for 2018.
Operator
And we can now take our next question from Sachin Mittal from DBS.
Sachin Mittal DBS Vickers Research - Research Analyst
I have a couple of questions. Firstly, could you explain about the handset costs, seems to have declined, for example, by $13 million in 4Q
'17 vs 4Q '16, while the acquisition cost for postpaid customer has gone up? So should not they be moving in tandem, the acquisition cost and
also handset subsidy? So why is there a divergence between the 2? That's question number one. Secondly, in terms of the spectrum which
you acquired, when will you start amortizing the spectrum -- the which you paid for the spectrum? When will the amortization start to kick
in? That's question number two. And in terms of some of the new business you're talking about, whether it's IoT and other businesses, Smart
Nation initiative, when should these revenue start -- really start to kick in, in 2018 onwards or the second half? Could you just guide us?
Kok Chew Lee M1 Limited - CFO & Chief Commercial Officer
Sachin, your first question on the handset volume and -- subsidy and acquisition cost. In fact, the higher handset loss that we saw this year,
despite the lower sales volume, mainly because of the mix of handset. We saw more non-iPhone Android handsets this year, where we
expense off the handset loss upfront as opposed to the treatment for iPhone. On spectrum, those spectrum that we have acquired, we have
actually started amortization since they awarded to us. On IoT and the initiative on Smart Nation, such initiative adoption will take time. And
you'll probably -- be looking at the second half of 2018 to see some contribution from these new initiatives.
Sachin Mittal DBS Vickers Research - Research Analyst
Sorry, just on the first question, you say that because of the non-iPhone sales, your handset cost was lesser, understandable. But -- then why
were the acquisition costs for postpaid subscriber rising? I mean, it should have also been lower, right, because of lower iPhone sales?
Kok Chew Lee M1 Limited - CFO & Chief Commercial Officer
Well, the acquisition cost for subscriber is higher because we also seeing, people taking up more higher-end plans. So higher-end plans
comes with higher subsidies. However, they contribute to higher subscription for their 24 months contracts.
Operator
We can now take our next question from Arthur Pineda from Citi.
Arthur Pineda Citigroup Inc, Research Division - Director and Head of Pan-Asian Telecommunications Research
Several questions from me, please. Firstly, in accounting, any guidance on the impact of the new IFRS standards on your numbers? Second
question I had is with regard to network built. I noticed that you mentioned you're going to go straight to 5G and avoid intermediate
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upgrades. How do you think this could actually impact your near-term competitiveness if your competitors are seeing upgrades to 4.5G? And
should we expect a bump-up in CapEx then by 2019 when 5G comes into play?
Kok Chew Lee M1 Limited - CFO & Chief Commercial Officer
Arthur, on your first question on the IFRS 15, I think it's too early at this point for us to provide you any impact, especially that IFRS 15 will
require us to restate the FY 2017 numbers, and we will provide more details of that when we come to our first quarter results briefing. On the
question on network evolution, we are taking the approach of using an extensive heterogeneous network through site densification and
deployment of small cells. That has proven to be a very cost-effective way to augment our network capacity, putting us in a very competitive
position to offer a good network quality to our customers. And that will also help us to avoid costly intermediate upgrade path, and we could
leapfrog directly to 5G when the spectrum is available.
Arthur Pineda Citigroup Inc, Research Division - Director and Head of Pan-Asian Telecommunications Research
Understood. And so just one follow-up, and I think this was asked earlier. Any reason for the absence of any revenue, margin or profit
guidance?
Kok Chew Lee M1 Limited - CFO & Chief Commercial Officer
Arthur, it's too early. We'll provide more detail about that in subsequent quarters.
Operator
We can now take our next question from Roshan Raj from Bank of America.
Roshan Raj Behera BofA Merrill Lynch, Research Division - Analyst
First on fixed service revenue, what sort of trend should we expect for 2018 and maybe the next 2 to 3 years? Should we expect a similar
strong growth rate or there could be some moderation going forward? Second, in terms of your subscriber adds, particularly in postpaid.
Could you at least say if the majority portion of the net adds are driven by M1 and not that of your MVNO? And related question is what is
the duration of your contract with MVNO? What we are trying to figure out is how easy or difficult is it for them to switch to another service
provider. Third, in terms of CapEx breakdown for 2018 versus 2017, if you strip out the project-related CapEx, is the allocation for similar
purposes? And what are these areas where you've investing? Some color will be very helpful.
Kok Chew Lee M1 Limited - CFO & Chief Commercial Officer
Okay. Roshan, on your question on the fixed services. So what we are doing is, as I mentioned earlier, right, we are actually scaling up our
ICT capabilities. We are expanding our solution over the fixed connectivity, and that's the way for us to capture new opportunities and we do
see that these are growth area for us, especially also in the Corporate segment, and that should drive revenue upside for us going forward. On
the M1 and MVNO arrangement, I'm not in the position to disclose details about arrangement between us and the MVNO. All I can say is
that both customer -- the increase in customer is driven by both from M1 and also from the contribution from the MVNO. On CapEx, if you
look at our normal maintenance CapEx this year is quite similar for -- if you look at 2018 compared to what we incurred in 2017. Of course,
the main bulk of the investment continue to be in the network space.
Roshan Raj Behera BofA Merrill Lynch, Research Division - Analyst
Thank you, Kok Chew. Just on the subscriber add. Can you at least say if your own customer base, or postpaid customer base, is it higher in
2017 versus 2016?
Poopalasingam Subramaniam M1 Limited - CMO
It is growing as compared to last year versus this year. We have grown M1's customer base.
Roshan Raj Behera BofA Merrill Lynch, Research Division - Analyst
Just one more question, if I may. On roaming revenue, what are the -- what is the trend you're seeing? Is it beginning to stabilize or beginning
to grow now?
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Poopalasingam Subramaniam M1 Limited - CMO
I think in the latest quarter, we saw a strong take-up of our Data Passport service, the number of active customers actually went up by close
to 50%. So more and more customers who are traveling are beginning to use that. Of course, the fourth quarter is also a seasonal quarter for
travel, so we are watching that trend closely as to where it goes forward.
Operator
We'll now take our next question from Foong Choong Chen from CIMB.
Choong Chen Foong CIMB Research - Analyst
Two questions from me. Firstly on the CapEx statement on -- in your slide, you said that you're continuing to explore deeper collaboration on
network sharing and you're expanding it from common antennas to the indoor 4.5G antenna systems. Are you referring to your collaboration
with StarHub, or is this with all industry players? And I wanted to ask whether that $120 million CapEx, does it include the savings from the
collaboration with StarHub? And if not, are we still looking at even further declines in the CapEx number once we have that collaboration
started? That's my first question. And then second question, regarding the fixed broadband ARPU number, which rose quite nicely on a
Q-on-Q basis. Subra, you mentioned that due to take-up of residential broadband, higher-tier packages. But I noted that in your website, the 1
gigabit per second is only up to about $39.90, so it's gone to $45. So how does that work? Can you help me reconcile that?
Poopalasingam Subramaniam M1 Limited - CMO
So let me just take that fixed question first. Essentially, we have bundled some value-added services. For example, WiFi mesh services and
so on, together with that, and we're seeing a stronger take-up of some of these services, which is why the residential subscription ARPU went
up.
Kok Chew Lee M1 Limited - CFO & Chief Commercial Officer
So on your second question on the CapEx. First, I just wanted to provide a bit more clarity on that. I mentioned earlier that the lower CapEx
that we're assuming this year, right, the $120 million compared to last year $150 million, we also incurred certain CapEx in the case of IT
system and also on the NB-IoT network, and that has been completed. Our collaboration, as I mentioned earlier, that refers to collaboration
with StarHub. We have actually expanded that from the usual common antenna solution to include the upgrade of, as I mentioned earlier,
right, the 4.5G indoor antenna systems at large buildings. So some of these collaboration will take time to roll out infrastructure at those
buildings, and you'll progressively see the benefit of such exercise over the years.
Choong Chen Foong CIMB Research - Analyst
So there's more savings to come from the CapEx front. I mean, $120 million is -- you've probably haven't taken the savings into account yet
for this year and could come up in '19, '20?
Kok Chew Lee M1 Limited - CFO & Chief Commercial Officer
We have actually for 2018 we have factored that into consideration, as I said, progressively it's an ongoing exercise between us and StarHub.
Operator
We can now take our next question from Luis Hilado from Maybank.
Luis A. Hilado Maybank Kim Eng Holdings Limited, Research Division - Senior Research Analyst
I have 3 questions. The first was regarding if you can disclose what percent of the subscriber base is still under contract now in 2017? Second
question is regarding the postpaid ARPUs, can you give us some color whether this is mostly due to the take-up of the higher-end data plans
or due to Circles? Last question is regarding the fixed network growth, quite strong 33% year-on-year in the fourth quarter. Is this going to be
recurring or is this more project-related?
Poopalasingam Subramaniam M1 Limited - CMO
So the first question, 70% of the base is contracted, okay?...
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Luis A. Hilado Maybank Kim Eng Holdings Limited, Research Division - Senior Research Analyst
How would that compare versus fourth quarter last year?
Poopalasingam Subramaniam M1 Limited - CMO
Well, it is a constant number. It's there -- thereabouts, yes. Fairly consistent at about 70%. ARPU, we do not take Circles into our ARPU
computation. So as I said -- so what -- as we said earlier, it's driven largely by the take-up of high-end plans and also the contribution from
roaming revenues.
Kok Chew Lee M1 Limited - CFO & Chief Commercial Officer
On your further question on fixed revenues, As I mentioned earlier, part of this revenue is also due to some of the project we secured. And
some of these projects, well, can be lumpy when it comes to recognition. As I said earlier, these are mostly contracts.
Luis A. Hilado Maybank Kim Eng Holdings Limited, Research Division - Senior Research Analyst
So just one follow-up on the postpaid ARPUs. Given that the percentage of subscribers exceeding the plans is now lower, quarter-on-quarter,
is it fair to say that quite a fair bit avail the unlimited data plan?
Poopalasingam Subramaniam M1 Limited - CMO
The unlimited data plan is at a higher subscription, about $118 at a contract and $98 without a contract. So it's still quite niche and a smaller
segment that makes up the unlimited. So people can estimate what their data usage is. We have a great app that people look at and can
monitor. And yes, so it's still a niche segment, with regards to the unlimited data plans.
Operator
We can now take our next question from Prem Jearajasingam from Macquarie.
Prem Jearajasingam Macquarie Research - Analyst
A few questions from me, please. First of all, what are your views with regards to the SIM-only plans and impact of TPG coming over the
course of this year? Do we expect a big take-up in our acquisition cost? Or do you actually expect churn to go up? Or how are you going to
deal with this as it progresses? That's one. Secondly, on your CapEx. Given that last year, part of that Capex was in relation to projects, if you
were to secure new projects this year, should we not expect that CapEx number to also jump? Or was there something unique with the
projects from last year? That's number two. And number three, I noticed that your inventories have picked up since third quarter this year in
'17, any reason for that? Is that the iPhones? Are they selling well, are they not selling well? Is there something else in that inventory line
that's caused it to jump?
Poopalasingam Subramaniam M1 Limited - CMO
So on the first question, as we've said before, we operate in a highly competitive market in Singapore and competition is not new to us. So we
are strengthening our proposition. And part of that was the introduction of SIM-only plans, I think back in 2015. And we continue to
reinforce and strengthen those propositions over the years. And I think when the new competition comes in, we have made our preparations
and we will continue to operate in that fashion.
Kok Chew Lee M1 Limited - CFO & Chief Commercial Officer
Okay. On CapEx, of course, what we have estimated now is based on what we can foresee at this point in time. Of course, if we do have any
new projects that we secure, that's a good thing. That would mean that we are bringing additional revenue for us in terms of spending CapEx.
On the inventory, right, in the 4Q, essentially those are mainly iPhones. We do ensure that we have handsets in stock to meet customer
demand for such products. And in fact, the iPhones inventory, our inventory is actually less than 3 months' demand.
Prem Jearajasingam Macquarie Research - Analyst
But do you foresee any problems for this iPhone? Anecdotal data would suggest that the demand is probably not as strong as what some may
have thought going into the launch?
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Kok Chew Lee M1 Limited - CFO & Chief Commercial Officer
No, we manage our inventory very tightly. We don't see any issue on the inventory that we're holding up.
Operator
(Operator Instructions) We can now take our next question from Srinivas Rao from Deutsche Bank.
Srinivas Rao Deutsche Bank AG, Research Division - Research Analyst
I wanted to check, you had launched your IoT network this year, so any color on any upcoming projects or wins that you have had this year?
And any color on what's happening on that front would be helpful.
Kok Chew Lee M1 Limited - CFO & Chief Commercial Officer
Yes, on the IoT brand, I think what is quite interesting is that we are -- I think as I mentioned earlier, these are new services, it takes time for
adoption. Although we're also driving for a number of new services being pilot and really some new projects as well, but I'm not at liberty to
disclose the details for such projects at this point in time.
Srinivas Rao Deutsche Bank AG, Research Division - Research Analyst
Any feedback on -- I mean, any number of projects? Or is it government contracts? I mean, it's something where -- which has been fairly
opaque for us, to be honest, across the entire telecom landscape. So -- and it gets talked about a lot, but we never get to hear exactly what's
happening. So that's the reason to ask.
Kok Chew Lee M1 Limited - CFO & Chief Commercial Officer
We will provide more details at the perfect time.
Operator
The next question comes from Annabeth Leow from Business Times.
Annabeth Leow
I understand a lot of this has been covered already. But I just wanted to check whether you have any updates that you can share on the
StarHub network share and collaboration as well as potentially other MVNO tie-ups potentially in the pipeline.
Kok Chew Lee M1 Limited - CFO & Chief Commercial Officer
So on StarHub collaboration, as I mentioned earlier, right, we are continuing to explore the collaboration. We have actually expanded from
our standard common antenna solution to joint upgrading our 4.5G indoor antenna systems, and this is an ongoing potential for us. Your
question is on MVNO, right?
Annabeth Leow
Yes.
Kok Chew Lee M1 Limited - CFO & Chief Commercial Officer
We are not in discussion at this point for any potential MVNO.
Annabeth Leow
Okay. It's just Circles.Life, the existing partnership?
Kok Chew Lee M1 Limited - CFO & Chief Commercial Officer
Today, we host Circles.Life, and therefore we host the PLDT.
Operator
The next question comes from Rama Maruvada from Daiwa Securities.
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Ramakrishna Maruvada Daiwa Securities Co. Ltd., Research Division - Head of Singapore Research
Three questions from me, please. Firstly, with regards to the IoT revenues, wondering which line item is this booked in? Is it postpaid or is it
booked in the fixed services segment? The second one is with regards to the IDD usage volume as well as revenue. The volumes are down
fairly significantly, but I see that on a -- there's an uptake in revenues on a quarter-on-quarter basis. So just wondering if you could talk to
what you're seeing in terms of pricing and why is it actually going up? The final one is with regards to your outlook, especially with regards
to 5G. You mentioned that you would be reusing existing frequency, could you elaborate a little bit more on this? Does it mean you would
not be touching the 700 megahertz spectrum until actually 5G arrives?
Kok Chew Lee M1 Limited - CFO & Chief Commercial Officer
Okay, Rama, the first question on IoT revenue, that will be in the postpaid mobile revenue, these mobile network related ICT solutions that
we provide. On IDD, right, essentially -- IDD only comprises both the retail revenue and bilateral revenue. So what are we seeing is that the
decline in the retail revenue as a result of the lower retail minutes. At the same time, we also saw higher bilateral revenue for IDD.
Denis Seek M1 Limited - CTO
And on your questions on the spectrum, in our outlook, I think what we are saying we are reusing existing spectrum for our small cell
deployment to augment our capacity. With regards to 5G, there will be new spectrum available similar to other parts of the world. And highly
likely, these spectrums could include the high-frequency, about 3 gigahertz.
Operator
Next question comes from June Supa from Goldman Sachs.
June Supapannachart Goldman Sachs Group Inc., Research Division - Research Analyst
Most of my questions are answered, but just 2 quick questions. Firstly, just wondering if you have any updates on the 700 megahertz
spectrum and when that might become available? And then secondly, I think you mentioned the data usage is 4.3 gigabyte per month, but it
was slightly cut off, so I just wanted to check that number.
Denis Seek M1 Limited - CTO
with regards to 700 megahertz spectrum, we do not see it likely to be available this year as it involves border frequency coordination with
neighboring countries.
Poopalasingam Subramaniam M1 Limited - CMO
So you heard correctly, it's 4.3 GB average of data usage this quarter.
Operator
Next question comes from Gopakumar from Nomura.
Gopakumar Pullaikodi Nomura Securities Co. Ltd., Research Division - Regional Head of Telecommunications Research
Just a follow-up question on the EBITDA margins. Firstly on the handset subsidies, do you expect the subsidies to pick up this year given the
launch of TPG, etc? Or do you expect lower subsidies given the higher take-up of SIM-only plans for 2018? Second question is again related
to the margins. As the fixed line segment revenue contribution increases, is it fair to expect that the EBITDA margin decline could continue
for the next 1 to 2 years?
Poopalasingam Subramaniam M1 Limited - CMO
On the first question, as we said earlier, the subsidies are generally tied to the nature of the plans that are taken up. Obviously, if customers
take up the SIM-only plans, then low subsidies come in with that.
Kok Chew Lee M1 Limited - CFO & Chief Commercial Officer
Your second question on EBITDA margin. First, as we mentioned previously, the fixed services has a lower EBITDA margin, hence the
EBITDA margin will be diluted as we draw our fixed services going forward.
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Operator
There are no more other questions on the line at this time. I would now like to hand back to the host for any additional or closing remarks.
Ivan Lim M1 Limited - Director of Corporate Communications & IR
Okay. Thank you all for joining the call today. If you have further questions, you can contact the IR or the Comm team after this. Else, we'll
speak again in the next quarter. Thank you.
Operator
That concludes today's conference. Thank you for your participation. Ladies and gentlemen, you may now disconnect.
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