Keppel T&T Shares Rise 34 Percent on MobileOne Sale (Update3)
By Natalia Olynec
Singapore, April 5 (Bloomberg) -- Keppel Telecommunications & Transportation Ltd. shares rose 34 percent after the company and other shareholders of MobileOne Asia Ltd. said they're in talks to sell Singapore's second-biggest cell phone company.
Singapore Press Holdings Ltd. and Keppel T&T each own 35 percent of MobileOne, or M1. The rest is held by a joint venture between the U.K.'s Cable & Wireless Plc and Hong Kong's Pacific Century CyberWorks Ltd., which hired Merrill Lynch & Co. a few months ago to find a buyer for its 30 percent stake.
With more than 800,000 customers, analysts estimate M1 may be worth about $1.6 billion, based on a $2,000 valuation per mobile customer. Keppel T&T's shares may rise further on expectations the company will earn a large return on its initial investment of S$110 million ($61 million) through the sale.
``The sale could add between S$1 and S$1.60 to the share price,'' said Stephanie Wong, an analyst at Kim Eng Securities Pte. ``The share price is reacting to the possible surplus they'll derive from the sale.''
The sale price could be crimped as telecommunications stocks are falling worldwide. Some of the largest phone companies such as AT&T Corp., British Telecommunications Plc and Deutsche Telekom AG have lost more than half their value in the past year.
``They should have done it long ago,'' said Jason See, chief investment officer at OUB Asset Management Ltd, which manages $2.1 billion and owns Keppel T&T shares. ``The market is so bad, they might not be able to get a good price.''
Analysts also speculated Keppel may be buying M1 from its partners. Keppel T&T has a joint venture with Telstra Corp., Australia's biggest phone company, to set up a fixed-line phone network in Singapore.
Premature
Keppel T&T, which also operates an Internet service provider, said a year ago Telstra was eyeing Cable & Wireless' M1 stake. Telstra is setting up a joint venture with CyberWorks to create an Asia-wide cellular network.
It's ``premature'' to discuss the talks, Keppel T&T said.
Keppel T&T relies on M1 for most of its revenue. The company, a unit of Singapore's largest diversified company, Keppel Corp., in February said its 2000 profit rose 41 percent to S$31.5 million on higher sales from the mobile phone business.
M1's pretax profit nearly tripled to S$79 million in 2000 from S$29 million a year ago. The company's sales rose 43 percent to S$570 million from S$400 million.
Keppel T&T's shares rose 24.5 Singapore cents to 96.5 Singapore cents. SPH shares rose 90 Singapore cents, or 4.5 percent, to S$21.00.
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