With respect to S&M expenses I have a slightly different view....

With respect to S&M expenses I have a slightly different view. I'll be careful here, as comparing cash flows to income statements can be confusing, as you highlighted earlier. I generally watch the 4Cs, but the HY report allows me to look in greater detail.

I agree the S&M expenses have been broadly flat, great news as you mention. However, 100k+ of microchips have been shipped to partners. We know that early on the partner channel was growing quickly and this has accelerated since FRX have stopped providing numbers. Over the last 18 months, they must have accounted for the lion's share of revenue growth. As revenue has exploded, so to must have partner commissions.

In HY17, FRX split out Partner Commissions as a cost of sale item along with Network Costs & the X-microchip cost. This year they have restated the accounts to leave only network costs as a cost of sale. This enables us to confirm your GM numbers. Marketing Costs in the FY17 report have been reclassified to S&M and they must now include partner commissions.

Although we can't calculate the partner commissions exactly, we know they must have grown significantly. This means FRX's marketing spend as a proportion of S&M must have reduced. This indicates that they are becoming more efficient and effective with their digital marketing efforts and subscriber acquisition. This is also reflected by the greater ratio of customers to subscribers.

If partner commissions have increased to $210k or more (say $1m in partner generated receipts @ 20%), FRX are in the enviable position of reducing their marketing spend whilst at the same time growing subscribers by 170%!

On your GM comments, I'd add that the segment reporting seems to show a consistent 50+ margin across the board. What puzzles me is how on earth they've managed to increase ARPU despite the introduction of the Local Plans. I'm happy they represent great value, but assumed they would cannibalise the higher value Global Plans, it seems not.

Which MVNO peers are you comparing AYS?, and others?