Samantha Chiew Published on Fri, Jul 02, 2021 

Singapore Telecommunications was not the first local telco to see restructuring. In September 2018, Keppel Corporation (Keppel Corp) and Singapore Press Holdings (SPH) — founding shareholders of M1 — offered to privatise the telco, which was then facing a saturated market shared in three almost equal parts among Singtel, StarHub and itself.

All three operators were commanding comfortable margins but the industry dynamics were poised to change as the government allowed a fourth mobile operator to come in.

Made through a special purpose vehicle (SPV) Konnectivity, which is jointly owned by Keppel Corp and SPH, the bid to acquire M1 was meant to gain majority control and then “help drive business changes in M1 and enable it to compete more effectively in the telecommunications industry”.

After six months, Bursa Malaysia-listed telco Axiata Group — then M1’s largest shareholder with a 28.7% stake — accepted the offer. With the concerted parties holding more than 90% of the shares, they went ahead to privatise M1, valuing it at $1.9 billion.

Since then, Keppel Corp and SPH have been busy repositioning M1 for growth. On Feb 23, M1 unveiled a refreshed brand identity and renewed its subscription plans. It has also announced it has its sights on becoming Singapore’s first digital network operator.

More importantly, the revamp of M1 is aligned with Keppel’s new strategy. The latter wants to become an integrated company offering sustainable urbanisation solutions, which can ride on M1’s 5G mobile networking infrastructure.

Under Keppel’s Vision 2030, M1 has been reclassified under Keppel’s connectivity business together with Keppel Data Centres and Keppel Logistics. The telco was previously housed under the company’s investment business, which included Keppel Capital, Keppel Urban Solutions (KUS) and KrisEnergy.

At the unveiling of M1’s refreshed branding, Keppel CEO Loh Chin Hua says the current synergy between M1 and Keppel’s other businesses has thus far exceeded expectations.

DBS analyst Sacchin Mittal says there will be further deals involving M1, which is divesting its network assets to a SPV jointly held with Keppel DC REIT. The network assets held by this SPV will then be leased to M1 to use and could potentially be used to buy more network assets belonging to other telcos. By doing so, the telcos can become more asset-light even as the SPV collects recurring income.