M1 Limited - Phillip Securities 2019-01-04: Accept The VGO

M1 LIMITED (SGX:B2F) | SGinvestors.io M1 LIMITED (SGX:B2F)

M1 Limited - Accept The VGO

  • We think shareholders should accept the VGO.
  • M1 is most exposed to TPG Telecom’s (TPG) entrance to the Singapore market.
  • Mobile postpaid & fixed services revenue is growing at healthy numbers.
  • We initiate coverage with acceptance of offer at S$2.06.

Company Background

  • M1 LIMITED (SGX:B2F) was listed in 2002 on the Singapore Exchange and is one of the three major full service telecommunication providers in Singapore.
  • M1 was the first operator in Singapore to commercially launch 3G services in 2005, first true island-wide wireless broadband service in 2006 and the first operator in South East Asia to offer nationwide 4G service in 2012. Singapore mobile segment accounts for more than 80% of M1’s revenue.

Investment Merits

  1. Voluntary general offer (VGO). Keppel Corp and Singapore Press Holdings via a special purpose vehicle Konnectivity made a VGO for all M1 shares at $2.06/share. Deemed interest of both parties is currently at 33.27%. Earliest possible close of offer is at 10 January 2019. The VGO is still pending IMDA approval. We expect the VGO to be successful as IMDA is unlikely to reject the VGO and the minimum acceptance required is 17% not subjected to Axiata’s acceptance.
  2. M1 is most exposed to TPG Telecom’s entrance to the Singapore market. TPG is slated to commence operations mid-2019. M1 will be most exposed to the entrance of TPG’s as ~ 80% of its revenue is derived from Singapore mobile.
  3. Consistent growth in mobile postpaid customers & increasing contribution from fixed services. We believe Circles.Life M1’s MVNO (Mobile Virtual Network Operator) has contributed significantly to postpaid customers through its innovative price plans. Postpaid customers grew 7.1% y-o-y as per latest results release and an average of 4.4% since FY16. The growth in postpaid customers has tapered the effect of industry shrinking ARPU (Average Revenue Per User). Fixed services grew 26% y-o-y to $38m and an average of 20% since FY16.
  • We initiate coverage with acceptance of offer. 

Alvin Chia Phillip Securities Research | https://www.stocksbnb.com/ 2019-01-04
SGX Stock Analyst Report NEUTRAL INITIATE NEUTRAL 2.06 SAME 2.06