M1 sale hangs in the balance
By Anand Menon
Monday, October 1 2001 11:54 AM
SINGAPORE--The sale of MobileOne Asia Pte Ltd (M1) is expected to proceed, although the deal could take a longer time to complete given the uncertain economic climate, analysts said.
Since throwing up the idea of selling the island's second-largest mobile operator in April this year, M1 shareholders have reportedly received bids from two companies--Maxis Communications, Malaysia's largest mobile phone operator, and Regional Wireless Co, a joint venture between Australia's Telstra Corp Ltd and Hong Kong's Pacific Century CyberWorks Ltd.
M1 is a joint venture between Singapore Press Holdings (35 percent), Keppel T&T (35 percent), Cable and Wireless (30 percent) and Pacific Century CyberWorks (30 percent). It registered profits of S$79.5 million on revenues of S$568 million last year, and has built up a customer base of more than 850,000 (out of a total of about 3 million in August) since it was formed in 1994.
“I think the delay in the sale of M1 is all in the price,” said JM Sasson & Co Pte Ltd telecommunications analyst, Danny Chung. “Given the recent stock market situation and the related uncertainty, buyers would not be in a hurry to snap things up as asset valuation may go down.”
Earlier this year, M1 was generally valued at around S$3 billion (US$1.65 billion). Chung has since lowered his price tag for M1 to S$2.5 billion (US$1.42 billion), citing lower valuations for regional and global telcos.
Although Chung expects the deal to be finalized “any time soon,” he reckons that "financially sound" shareholders like Singapore Press Holdings and Keppel T&T are probably not in a hurry to sell.
As of late August, Maxis is said to have offered only US$1.2 billion for M1, and its CEO, Jamaludin Ibrahim, declined to say whether he would increase the bid.
Last week, a source close to the M1 deal told Singapore.CNET.com that there has been “some” increase from bidders. However, discussions are ongoing.
The Australian Financial Review also reported in August that Regional Wireless was prepared to pay US$1.6 billion for the company, but that M1's owners were asking for more. Newspaper reports in Australia also cited sources close to the negotiations as saying that the PCCW-Telstra joint venture refused to put in a bid that met M1's demands, effectively stalling the auction of Singapore's No 2 wireless operator.
However, PCCW group COO William Cheung assured reporters then that the PCCW-Telstra company remained interested in M1. "We have submitted a bid for it. At this point in time, we're waiting for the owners of M1 (MobileOne) to respond," Cheung said.
When contacted last week, a Maxis spokesperson said she was “unable to comment on the issue at this point of time.” Both Keppel T&T and Regional Wireless declined to respond to queries regarding the M1 sale.
Said JM Sassoon's Chung: “I think the one who bids higher will get, subject to government approval. It's a commercial transaction."
In July, the Singapore government said it would not bar Maxis from buying M1. "Maxis has made a bid and we will await the outcome but we are a free and open economy," said Communications and IT Minister Yeo Cheow Tong. "Unless there are any anti-competitive implications, our philosophy is not to intervene," said Yeo, who was speaking on the sidelines of a meeting of Asian telecommunications ministers.
Meanwhile, Info-communications Development Authority of Singapore (IDA) spokesperson Jennifer Toh said that it hasn't, as yet, received any proposal or plan from M1 regarding a change of shareholders.
According to her, Facilities-Based Operators undergoing shareholder changes need to submit the changes to IDA for approval at least a month before it (the shareholder changes) takes effect.
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