M1 stakeholders drop strategic review plan; cellco’s Q2 results fail to excite

19 Jul 2017

Singapore Press Holdings (SPH), Keppel Telecommunications & Transportation (Keppel T&T) and Malaysia’s Axiata Group, which collectively control a roughly 60% stake in Singaporean telco M1, have decided not to proceed further with the strategic review of their holdings in the operator. Local press reports cite a regulatory filing to the Singapore Exchange yesterday (18 July), in which SPH said that having taken into consideration the proposals from interested parties – which despite a favourable level of interest have not met the minimum criteria and parameters determined by the majority shareholders – they have decided to drop the strategic review. ‘For the avoidance of doubt, no arrangement or agreement with any third party has been reached in relation to each majority shareholders’ respective shareholdings in M1 Limited,’ the group said.

As previously reported by TeleGeography’s CommsUpdate, in March this year SPH, Keppel T&T and Axiata issued separate statements confirming they were undertaking the strategic review, and appointed Morgan Stanley Asia (Singapore) as financial adviser to assist.

M1 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. However, Singapore’s smallest telecoms operator by subscribers and revenue has struggled of late. Its latest financial release (covering the three-month period to 30 June 2017) highlights a 4.7% year-on-year rise in revenues to SGD252 million from SGD240 million, although representing a 3.5% quarter-on-quarter decline from SGD261 million in 1Q17. Service revenues were broadly unchanged y-o-y at SGD205 million, compared to SGD204 million in 2Q16. Second-quarter net profit, however, slumped to SGD33 million, down 20.8% from SGD41 million in the year-earlier period, as EBITDA dropped 10.7% to SGD73 million and operating costs rose 17.5% to SGD103 million.

In terms of operational highlights, M1 booked mobile service revenue of SGD160 million (down 2% y-o-y), as its post-paid customer base fell by a net 4,000 to 1.267 million when compared to the previous quarter, but increased by 45,000 compared to the second quarter of 2016. Meanwhile, the pre-paid customer base increased by 2,000 to 777,000 on a quarterly sequential basis. Post-paid ARPU fell by 6.8% y-o-y, it said, while the pre-paid side saw its ARPU fall by 14.6%. More positively, the decline in mobile services revenue was offset by a strong rise in fixed services revenue. The segment saw a 19.2% increase in revenue to SGD31 million compared to 2Q16, fuelled by a 31,000 y-o-y increase in the company’s fibre customer base to 176,000.

Singapore, M1