Singapore Telcos - Maybank Kim Eng 2016-06-22: Fund-raising woes confirmed

Singapore Telcos - Maybank Kim Eng 2016-06-22: Fund-raising woes confirmed  STARHUB LTD CC3.SI  SINGTEL Singapore Telecommunications Z74.SI  M1 LIMITED B2F.SI 

Singapore Telcos - Fund-raising woes confirmed

MyRepublic confirmed “struggle” to raise funds

  • Newsflow is intensifying on the funding woes of fourth telco contender MyRepublic (MR). A local newspaper has gotten hold of MR’s 2015 financial statement and found out that it had just SGD130,000 cash, with no cash raised so far. 
  • When interviewed, MR’s CEO confirmed its banks have been “struggling” to raise funds, but was confident of getting the money. 
  • We have BUYs on Singtel and StarHub and HOLD on M1, but given the relative under-performances of M1 and StarHub vs Singtel in the past 12 months, M1 and StarHub will probably see higher short-term trading churn.

Fund-raising difficulties anticipated

Lack of success confirmed by MR’s CEO

  • The Today newspaper said that it had obtained a copy of MR's financial statement that showed it lost SGD9.4m in Singapore and NZD5.5m in New Zealand last year, and had just SGD130,000 in cash at the end of 2015. 
  • It also claimed that no funds have been raised so far, and in an interview, MR's CEO Malcolm Rodrigues acknowledged that DBS and Goldman Sachs "have been struggling to some extent".

Still in wait-and-see mode

  • However, Mr Rodrigues also claimed that they were meeting some companies to raise money, including equipment vendors for loans, and was confident of getting SGD150m in private equity and SGD250m in vendor financing by the time of the auction. 
  • So far, nothing has been heard about Consistel, the other potential bidder. 
  • MR has stated that it needs SGD250m to build a nationwide network, while Consistel has said it needs SGD1b.

Gregory Yap Maybank Kim Eng | http://www.maybank-ke.com.sg/ 2016-06-22
OCBC Securities SGX Stock Analyst Report BUY Maintain BUY 4.15 Same 4.15
BUY Maintain BUY 4.50 Same 4.50
BUY Maintain BUY 3.09 Same 3.09