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Is M1 Ltd on The Chopping Block? Here’s What Its Major Shareholders Are Saying

Shares of local telco M1 Ltd (SGX: B2F) could be on the chopping block of its major investors.

Newswires reported last Friday that M1’s major shareholders, namely Keppel Corporation Limited  (SGX: BN4)Singapore Press Holdings Limited (SGX: T39), and Malaysian-listed telco Axiata Group Berhad (KLSE:6888.KL), were said to be exploring a possible sale of their stakes in M1.

The idea behind selling shares of M1 is not new for Keppel Corporation. In its 2015 fourth quarter earnings briefing, the company’s chief executive officer, Loh Chin Hua, commented that M1 is not a core investment for Keppel Corporation:

“We have said before, M1 is not a core investment for us. But when we sell would depend on many things. In the meantime, we are quite happy with the contribution that M1 is making to Keppel T&T and to the Group.”

Keppel Corporation, which holds a 19.1% stake in M1, houses the stake inside its 80%-owned subsidiary, Keppel Telecommunications & Transportation Ltd (SGX: K11).

Elsewhere, Axiata Group’s management commented in September 2016 that a bigger stake in M1 would be “strategically good.” It said:

“Strategically, it will be good for us to increase the stake. If the price is right, we will seriously consider it.”

To be sure, Axiata was not in any negotiations to increase its M1 stake back then. Furthermore, the Malaysian company also felt that having four telcos in Singapore can be considered “one too many.” In December 2016, the Australian telco, TPG Telecom, won the bid to become Singapore’s fourth telco. Axiata is the biggest shareholder of M1 with a 28.5% stake.

Strategic review

M1 and its three major investors also came out with separate statements last Friday that all followed a similar vein. Singapore Press Holdings’ statement read:

“The Company [SPH], Keppel Telecommunications & 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.

The Company, Keppel Telecommunications & Transportation Ltd and Axiata Group Berhad have jointly appointed Morgan Stanley Asia (Singapore) Pte. as their financial adviser to assist with the strategic review.

There is no assurance that any transaction will materialise from such strategic review or that any definitive or binding agreement will be reached.

If and when there are any material developments which warrant disclosure, the Company will, in compliance with applicable rules, make further announcements as appropriate.”

SPH owns a 13% stake in M1. Together with Keppel Corporation and Axiata, the trio collectively owns about 61% of M1.

The final word

Amidst the flurry of news on Friday, M1 also announced that its chief financial officer, Nicholas Tan, has decided to step down to pursue other interests. Lee Kok Chew, who is M1’s chief commercial officer, will be taking over the company’s CFO duties on top of his current role.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore writer Chin Hui Leong doesn't own shares in any company mentioned.