Is M1's 19 cent dividend sustainable? Part 2

Following my previous post here, let's attempt to go further down the road and see the impact of the 4th telco to M1.

	FY2014	FY2015	FY2016	FY2017	FY2018
	Actual	Just my guess		4th telco	Pressure
EPS (cents)	18.8	19.9	21.1	21.9	22.3
Growth	8%	6%	6%	4%	2%
Scenario 1 (80% payout)
Regular payout/share(cents)	18.9	15.9	16.2	17.5	17.8
Payout ratio	101%	80%
Dividend Yield (@ $3.20)		4.97%	5.07%	5.48%	5.58%
Scenario 2 (85% payout)
Regular payout/share(cents)	18.9	16.9	17.3	18.6	19.0
Payout ratio	101%	85%
Dividend Yield (@ $3.20)		5.28%	5.39%	5.82%	5.92%
Scenario 3 (90% payout)
Regular payout/share(cents)	18.9	17.9	18.3	19.7	20.1
Payout ratio	101%	90%
Dividend Yield (@ $3.20)		5.60%	5.71%	6.16%	6.27%
Scenario 4 (95% payout)
Regular payout/share(cents)	18.9	18.9	19.3	20.8	21.2
Payout ratio	101%	95%
Dividend Yield (@ $3.20)		5.90%	6.03%	6.50%	6.62%

Growth assumption

I've assumed FY2015 and 2016 growth to maintain at 6% mainly due to growth from their fixed lines (fibre plans).

Although the 4th Telco is expected to enter during 2017, I've expected there to be little to no significant change in the market share of the incumbent. After all, the incumbents would be trying their best to create customer stickiness in these few years.

However, I expect M1 to lower their prices to defend their market share in 2017. Let's just call it an early defence; hence a 4% growth in FY2017.

FY2018, although I really don't expect the new entrant to make significant impact yet, I've decided to be conservative and lowered M1's growth.

Dividends

To be very conservative, I've assumed that M1 pays no special dividends in the scenario above.

I've also assumed that management will scale down their payout ratio to create a buffer for the great war they've to fight in 2017/2018. However, I expect them to minimally maintain the absolute dividend per share amount, drawing reference to their past track record.

New revenue driver? (not factored in the growth above)

M1 has announced that it will be launching a handy payment service for small businesses (like push carts and small merchants) which is essentially M1's own version of a POS (Point-of-Sale) service.

Remember those clunky devices for credit card payments? Yes it is that!

Want to know why M1's version looks so much more appealing?

1. It is only the size of a deck of card. 
2. It doesn't require a telephone line. You just plug in the audio jack of any Android or iOS smart devices
3. It runs on M1's data plan instead of connecting to loonnngg wires.
4. Rental is one-tenth of the usual ($5.35/month).
5. No minimum transaction nor deposit required! (WOAH)

Is M1 going to disrupt the traditional POS system? I don't know. But this sure sound interesting. If I'm a business, I'm definitely checking this out.

MiBox
Seriously though, are they re-looking at this or not? This could be the next set up box that taps on the hype with HULU, NETFLIX and many more. They could very easily disrupt the current pay-TV scene.