Malaysia-based Axiata Group accepted an offer from Keppel and media company Singapore Press Holdings (SPH) to sell its 28.7 per cent stake in Singapore mobile operator M1 for MYR1.65 billion ($404 million).
Axiata, which first invested in M1 in 2005, said in a statement it decided to accept the offer due to the need for “capital reallocation and new priorities in line with its vision to be the next generation digital champion by 2022 and the investments required to achieve that”.
The company also noted it prefers not to be a minority investor in a potentially privatised company, making the investment illiquid. The deal will generate an estimated gain of MYR126.5 million for Axiata.
Jamaludin Ibrahim, Axiata group president and CEO, said: “It is actually not an easy decision for us. We like our investment in M1 and believe in its long-term future. At the same time, we need to undertake a major reprioritisation and make better use of our capital to chart a new chapter for the group in line with our new vision, whilst also further enhancing our shareholders’ value”.
In early January, Keppel and SPH used their joint venture Konnectivity to make a formal offer for all of M1’s issued shares they don’t own, in a bid to gain a majority shareholding in the third-ranked operator, which has a 23 per cent market share by subscribers.
Keppel holds a 19.23 per cent stake in M1 and SPH 13.38 per cent.
Ng Yat Chung, CEO of SPH, said: “With control of M1, Keppel and SPH will be able to help M1 compete more effectively in the challenging telecommunications industry. We see opportunities to leverage on M1’s mobile platform to offer on-demand and ready digital content to better serve our customers.”
Loh Chin Hua, CEO of Keppel, added: “The increasingly challenging and competitive market conditions in the Singapore telecommunications sector requires M1 to take bold steps to transform. Keppel is one of the founding shareholders of M1 and continues to see long-term value in the company. We will work with M1’s management to develop and implement new strategic and operational plans to sharpen its competitive edge, increase its momentum in digital transformation and undertake growth initiatives.”
Competition in the city state intensified after four MVNOs launched services over the last two years. In 2018 its three major mobile players faced falling or weak earnings along with drops in mobile subscriber numbers and ARPU.
In addition, Australia-based TPG Telecom won a licence to become a fourth mobile operator.Subscribe to our daily newsletter Back