SPH, Keppel mull buyout of $1.1bn S’pore carrier M1

Bloomberg

Singapore Press Holdings (SPH) and an arm of Keppel Corp. are considering making a general offer for the shares they don’t already own in the city-state’s smallest wireless operator, M1 Ltd., people with knowledge of the matter said.
The pair has approached M1’s biggest shareholder, Malaysian carrier Axiata Group Bhd., about the potential transaction, the people said, asking not to be identified because the information is private.
A deal for M1 could be announced as soon as the next few days, they said.
M1’s market value has dropped 59 percent to S$1.51 billion ($1.1 billion) since its 2015 high, while revenue is expected to fall about 1.5 percent this year, based on analyst estimates. As the smallest carrier in Singapore’s saturated wireless phone market, M1 has had to cut prices, dragging revenue per user lower every year since 2010.
“If Keppel and SPH do make a move for M1, it is primarily due to the value that the telco offers because of its share-price weakness, ” said Kenny Liew, an analyst at Fitch Solutions. “M1, despite seeing its revenues slide, has still maintained a relatively stable profit because of its capital efficiency, and this will definitely be attractive to both Keppel and SPH.”
Axiata shares rose 4.2 percent, the biggest gain since Aug. 8, in Kuala Lumpur trading on Wednesday. Any offer should reflect an acceptable premium to buy control of M1, Axiata said in a statement.
A buyout of the Axiata stake in M1, which was 28.7 percent as of February, would put publisher Singapore Press, also known as SPH, and infrastructure company Keppel in control of the carrier, just as TPG Telecom Ltd. enters the market this year. The addition of a fourth competitor for mobile phone subscribers will add to pressure on the companies to lower prices even further and raise revenue by offering additional services such as TV and movies on demand.
“A simplification in the ownership in M1 could
also make it easier for major decisions to be made,”
said Joseph Ng, an analyst
at Oversea-Chinese Banking Corp.
M1 spokesman Ivan Lim said the company can’t comment on shareholder plans. Representatives for SPH
and Keppel didn’t immediately answer requests for comment.