Singapore telco M1 approaches China Mobile, PE firms for stake sale

Visual of Singapore downtown nightscape. Credit: Flickr/digitalpimp

Top shareholders in Singapore telecoms company M1 Ltd have approached potential buyers China Mobile and global private equity firms, among others, to sell their combined majority stake in the firm, sources familiar with the matter said.

The three main shareholders of Singapore’s smallest listed telecoms player, who own a combined 61 percent, flagged a strategic review of their investments last month, and jointly appointed Morgan Stanley as their financial adviser.

They did not give a reason behind the review of their stake in the S$1.9 billion ($1.36 billion) company.

The sources said the three shareholders – Malaysia’s Axiata Group, Singapore Press Holdings (SPH) and Keppel Telecommunications & Transportation – had also reached out to other telecoms firms, cash-rich business groups in China and Japanese tech firms to gauge their interest.

First-round bids for M1, long seen as a target due to its small size and diverse shareholding, are expected in a few weeks, the sources said. They added that talks between the parties were still at an early stage and there was no certainty the process would succeed.

They did not provide details on how China Mobile or the other prospective bidders have responded to the approach.

When contacted for comments, Keppel, SPH and Axiata referred Reuters to their joint statement issued last month. M1 referred the query to its shareholders. China Mobile declined to comment.

The sources declined to be identified as they were not authorised to speak to the media.

The sale process comes as competition heats up in Singapore, with Australia’s TPG Telecom set to launch its services next year after winning a licence to become the city-state’s fourth telecom operator. Analysts expect M1 to be the most vulnerable to new competition.

M1’s shares have nearly halved over the past two years due to its weak business performance amid increased competition.

But Singapore’s well-regulated telecoms market offers stable cash flows. Some telecoms firms could also use the city-state as a launch pad into a region that is still developing, industry executives and analysts said.

“It’s actually a decent business for current owners or any new ones if you factor in the upsides,” said Rameez Ansar, co-founder of Singapore firm Circles.Life, which leases towers from M1, referring to weakness in M1’s share performance and Singapore’s position as a tier-one market and high user revenues.

M1 could also fit in a portfolio of other telecoms ventures.

“M1 could become part of a portfolio of investments in telecom-related assets. Someone looking for financial returns could be interested, if other portfolio companies could help to enhance M1’s overall value,” said Gregory Yap, analyst at Maybank Kim Eng Securities.

Under Singapore’s rules, an acquirer of a 30 percent or more stake in a listed company is required to make an offer to buy out the rest of the shareholders.

Some of the sources said M1’s main shareholders would require a substantial control premium for the sale to get done.

State-run China Mobile, as well as local peers China Unicom Hong Kong Ltd and China Telecom Corp Ltd, the country’s big telecoms firms, are pursuing expansion plans beyond their home market.

If China Mobile acquires M1, it would mark its biggest overseas foray. The world’s largest mobile operator bought an 18 percent stake in Thailand’s True Corp in 2014 after buying Pakistan telecoms firm Paktel in 2007.

Reuters

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.