M1 shareholders mulling disposal options

20 Mar 2017

Singapore Press Holdings (SPH), Keppel Telecommunications and Transportation and Axiata Group, which between them collectively control a roughly 60% stake in Singaporean telco M1, are reportedly considering options to sell their respective stakes, although each declined to give a reason for the move. In what is being seen as the first major M&A activity in the city-state in years, against the backdrop of the imminent arrival of competition from a fourth player in the shape of Aussie-backed TPG Telecom, the shareholders issued separate statements confirming they are undertaking a strategic review of their respective shareholdings in M1. A media release by SPH noted: ’The company, Keppel Telecommunications and Transportation Ltd and Axiata Group Berhad are currently undertaking a strategic review in respect of their respective shareholdings in M1 Limited which may or may not lead to a transaction’. Morgan Stanley Asia (Singapore) has been appointed as financial adviser to assist with the strategic review.

The Singapore telco is estimated to be worth SGD2.05 billion (USD1.5 billion), valuing the primary stakeholders’ shares – Axiata (~28%), Keppel (~19%) and SPH (~13%) – at more than SGD1.20 billion. Singapore’s smallest telecoms operator by subscribers and revenue has struggled of late. For the year ending 31 December 2016, M1 reported that net income slumped 16.1% year-on-year amid turbulent changes in the local market and the impending arrival of a fourth telco. The company booked net profit of SGD149.7 million, down from SGD178.5 million in 2015, impacted by lower international voice and roaming revenues, weakening demand for retail traffic and lower handset sales. Revenue slipped 8.3% y-o-y to SGD1.06 billion, as the company reflected on what it terms a challenging time for the industry – a situation it expects to continue for at least the next few quarters. In her conference call, M1 CEO Ms Karen Kooi said: ‘It has been a challenging year in 2016, with increased competitive activity. Our traditional telco revenue continued to be impacted by over-the-top services but we are growing in mobile data and strongly in fixed services’.

Singapore, M1 Limited (M1)