Axiata open to M1 stake offers

Share price jumps on news of interest from S’pore firms

KUALA LUMPUR: Axiata Group Bhd is open to considering any offer for its stake in Singapore wireless operator M1 Ltd, but said that any bid should incorporate “acceptable control premium”.

Shares in Axiata surged 4.2% higher yesterday after Bloomberg reported that Singapore Press Holdings Ltd (SPH) and a unit of Keppel Corp Ltd (KCL) were considering making a general offer for the shares they don’t already own in M1.

Axiata owns a 28.7% stake in M1. “The company is currently reviewing its position in view of a possible transaction to be further announced by KCL and SPH on its M1 shares,” Axiata said in a statement yesterday.

Shares in M1 have been suspended from trading pending an announcement.

Based on its last traded price, the company has a market value of S$1.508bil. This means Axiata’s stake in the company is worth at least S$432mil, or about RM1.3bil.

“We believe that any offer from any party should not only reflect and consider the accurate future value of M1, but also incorporate acceptable control premium based on market norms and precedent transactions of similar nature,” Axiata said.

The company said it is already in discussion with a financial institution to act as its advisor to review various options available.

“The financial institution will also advise the company once KCL and SPH officially announce their proposed transaction,” Axiata said.

Shares in Axiata was last traded at RM4.75 on volume of over 3 million shares.

Based on the data compiled by Bloomberg, publisher SPH owns nearly 13.5% of M1, while Keppel Telecommunications & Transportation Ltd (Keppel T&T), a listed subsidiary of Keppel Corp, controls about 19.3%.

If the talks with Axiata turn out to be favourable for the pair, then both SPH and Keppel would emerge as the controlling shareholders of M1.

However, in the event that the price announced by SPH and Keppel is too low, Axiata may decide to make its own offer for M1, a source told the newswire.

Trading in the shares of M1 and Keppel T&T has been halted since Monday pending announcements.

In July 2017, SPH and Keppel – together with Axiata – ended a strategic review of their stakes in the operator after potential suitors to buy the city state’s smallest cellular services provider dropped out.

M1’s market value has dropped 59% to S$1.51bil (RM4.58bil) since its 2015 high, while revenue is expected to fall about 1.5% 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.