SINGAPORE (June 2): Internet provider MyRepublic is reviving its telco dreams, after losing out in a race last year to become Singapore’s fourth mobile operator.
TPG Telecom in December bested MyRepublic with a winning bid of $105 million in the New Entrant Spectrum Auction (NESA).
(See: TPG Telecom wins race to become Singapore’s fourth telco)
Now, MyRepublic is said to be seeking a private-equity partner as it bids for local wireless carrier M1.
“We think MyRepublic could be a potential suitor as it lost out in the 4G race and could be looking to revive its mobile ambitions,” says RHB Research in a flash note on Thursday. “The stumbling block for a deal, in our view, would come from the high asking price by sellers.”
Three of the biggest shareholders in M1 – Singapore Press Holdings (SPH), Keppel Telecommunications & Transportation (Keppel T&T) and Malaysian telco Axiata Group – in March signalled their intention to dispose of their respective stakes.
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The three companies hold a collective stake of more than 60% in M1. Axiata is the biggest shareholder with a stake of just over 28%, followed by Keppel T&T with around 19% and SPH with about 13%.
(See: Three biggest shareholders of M1 mulling stake sale)
“In our view, a MyRepublic-M1 union, if it materialises, would place M1 in a stronger position to stave off competition from TPG, which may look to bundle a mobile service with a fixed broadband offering to capture subscribers,” RHB says.
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Backed by billionaire Xavier Niel, MyRepublic is the latest in a series of companies that have shown interest in Singapore’s third-largest carrier.
According to reports, private equity firm Warburg Pincus had earlier expressed interest, though it is believed to be no longer pursuing a deal.
China-based coal producer Shanxi Meijin Energy Co. and China Broadband Capital have also separately submitted first-round offers for M1, according to people with knowledge of the matter.
“We think Axiata could also turn buyer of M1 if it is not able to garner a good price for its stake,” RHB says.
(See: China coal miner said to vie for M1)
M1 in the first quarter ended March posted a 14.6% decline in net profit to $36.3 million, falling from $42.5 million in the corresponding period a year ago.
EBITDA fell 5.1% in 1Q17 to $79.0 million, compared to $83.3 million a year ago.
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However, M1’s shares have climbed more than 15% this year, giving the company a market value of about $2.1 billion.
RHB is keeping its “neutral” rating on M1 with a target price of $2.05.
As at 11.50am, shares of M1 are trading flat at $2.27.
