M1 (formerly: MobileOne)

An interesting acquisition from DBS, which has made larger deemed interest of Temasek. DBS bought 1.6 million shares, @ ~$2.5, which caused Temasek deemed interest increased from 19.85% to 20.02%

http://infopub.sgx.com/FileOpen/_Form%20...eID=421004

I am speculating, saving bullets for more of M1?  

(vested in M1)

Axiata said to seek buyers for US$700m of overseas holdings
13 Sep 2016 16:20
[KUALA LUMPUR ] Axiata Group Bhd, Malaysia's biggest mobile-phone operator, is seeking to trim stakes in some of its overseas operations in deals that could raise as much as US$700 million, people familiar with the matter said.

The Kuala Lumpur-based company is seeking a buyer for about 11 per cent of Indonesian unit PT XL Axiata, which has a market value of US$2.2 billion, according to the people.

It is also selling as much as 30 per cent each of listed Sri Lanka unit Dialog Axiata Plc and closely held Cambodian subsidiary Smart Axiata Co, the people said, asking not to be identified because the information is private.
...
BLOOMBERG

Source: Business Times Breaking News

(13-09-2016, 08:01 PM)CityFarmer Wrote: I am speculating, saving bullets for more of M1?  [emoji14]

(vested in M1)

Axiata said to seek buyers for US$700m of overseas holdings
13 Sep 2016 16:20
[KUALA LUMPUR ] Axiata Group Bhd, Malaysia's biggest mobile-phone operator, is seeking to trim stakes in some of its overseas operations in deals that could raise as much as US$700 million, people familiar with the matter said.

The Kuala Lumpur-based company is seeking a buyer for about 11 per cent of Indonesian unit PT XL Axiata, which has a market value of US$2.2 billion, according to the people.

It is also selling as much as 30 per cent each of listed Sri Lanka unit Dialog Axiata Plc and closely held Cambodian subsidiary Smart Axiata Co, the people said, asking not to be identified because the information is private.
...
BLOOMBERG

Source: Business Times Breaking News

https://sg.finance.yahoo.com/news/false-...00580.html

They are definitely not raising stakes...

(vested)

Sent from my LG-H818 using Tapatalk

The stage has been set. Someone is strring the pot.
Time to buy in.

(vested)

M1 announced on the last day of 3Q i.e. 30 Sept 2016. The 3Q result will be announced 18 days later. M1 is moving fast.

I have not seen the pre-qualify result on fourth mobile operator auction yet. It should be around any time soon...

(vested)

------
M1 Limited wishes to announce that it will release its Third Quarter 2016 financial results
after close of trading on 18 October 2016.

http://infopub.sgx.com/FileOpen/Date%20o...eID=423103

M1 result is quite bad.

http://infopub.sgx.com/FileOpen/3Q16SGXA...eID=425276

Earning and Cash reduced quite significantly.

(19-10-2016, 09:45 AM)corydorus Wrote: M1 result is quite bad.

http://infopub.sgx.com/FileOpen/3Q16SGXA...eID=425276

Earning and Cash reduced quite significantly.

I saw few points on the 9 months result.

- Service revenue decreased <2%, pretty stable with the market competition with reducing pricing.
- Accounting Net profit decreased by >12%, but OCF increased by 37%, and free cash flow (ex-spectrum expense) increased by >4%

The result, is better than I expected. Let's see how the other two telcos' performance later. The EBITDA/Net margins are still pretty healthy, IMO

(vested)

I feel that main cause of fall in NP is reduction in ARPU and
Not  amortization and depreciation as claimed by management

While I noted the strong Ocf, I felt the war has started before the entrant of enemy.

The fall in ARPU imo is a serious concern. With competitive pricing with the 4th telecom, it will make all my previous assumptions about entry of 4th telecom seem liberal. Since it is already falling 10% without enemy appearing 

Not vested, but interested


------cut and paste from my blog ----

Has the fundamentals of M1 and SPH caught up with valuation

I doubt anyone would disagree with me that the fundamentals of these 2 companies are being affected by competition. M1 by a highly possible 4th Telcom player and SPH by alternative news digital platforms.

But that is only half the question, a better question would be "has the challenging outlook being reflected in the shares price, and has it overshoot to the downside?"

Personally, between the 2 companies, I would go for M1, notwithstanding the fact that its latest quarter results sucks. It blames the fall in net profits to higher depreciation and ammortization costs, but there is more than meets the eye.

If you look at 9 months result, there is indeed a significant increase in amortization and depreciation from 86,1mio to 93.3 mio, but if you look at 3Q results by itself, the difference in YoY depreciation and amortization is a mere 1.3 mio. The real cause is the reduction in ARPU. The lower handset sales while affect revenue will also cause higher cost of sales, so in a while, it will offsets one another.

Is reduction of ARPU worrying? You bet, since the competition has not even started.

I have assume the following in the face of a 4th Telcom.

1) It costs a 10% fall in ARPU to the price competition
2) It manage a 10% market share within 2 years, and cause 25% reduction in M1 mobile's market shares.
3) M1 continues to pay out 80% of earnings.
4) M1 is able to maintain its NP before the "war" begins

I expect a 5% dividend yield with the reduced earnings in 2018, and the price should be $2.2 I made a bid for today but did not get anything. But I will not bid anymore tomorrow.

Because as you can see, assumption 1 should be worse since without competition, it had already worsen by 10%.

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Since I gave a damning report, why did I still say I chose M1 over SPH. 

Any real fight with the 4th Telcom will only starts in 2018 earliest (10% market share), I assume of the 10% loss, half of it comes from M1. It might not be too bad.

I do think with a reduced earnings, M1 can sustain its operations albeit at a lower earnings. There are also 2 silver linings in M1 report, cash flow is still strong, and they are still growing their subscribers base. However, it is due to a higher penetration rate, and I suspect Singtel and STarhub will both report an increase in subscribers. 

With SPH, it is not going to easy. It has already increase ASP, but its reduced dividends of 18 cents is already above 100% payout. 

I do not think print will go the way of the dodo, but I seriously do not know the "bottom" and hence I cannot predict what price is a fair price since I cannot predict future earnings and hence yield. 

However, SPH shares price's fall is not as bad as M1. If you ask me, SPH competition is 2 folds. One is direct advertising competition, such as google and other online platforms. Next, readership. If readership of papers continue to fall the attractiveness of advertising through print is going to be even lower. 

SPH is in news business. Beside speed of updates in news, there is another issue of news print. I get news alert from 4 different news apps on my phone. If I want my finance news, I go for reuters and bloomberg, there is no need to wait for Straits Times to reproduce their news. 

Then why is the price holding up relatively well. I think its due to the speculation of timing of injection of Seletar Mall into SPH reit and the possibility of special dividends. 

However, I will watch M1 closely. 




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Posted by Sillyinvestor at 3:49 AM No comments:  
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"Is reduction of ARPU worrying? You bet, since the competition has not even started."

The competition has not even started (with new mobile operator) ? IMO, the competition has started, at the moment IDA declared incentive for new mobile operator. The focus of the competition, is to rise the entry barrier. The strategy, is to kill it, even before it emerges. 

I do agree, reduction in ARPU, is always a cause of concern. It should be viewed together with cost per user, and churn rate. The ultimate importance, the net effect in sustaining earning, IMO

(vested)

(20-10-2016, 09:15 AM)CityFarmer Wrote: "Is reduction of ARPU worrying? You bet, since the competition has not even started."

The competition has not even started (with new mobile operator) ? IMO, the competition has started, at the moment IDA declared incentive for new mobile operator. The focus of the competition, is to rise the entry barrier. The strategy, is to kill it, even before it emerges. 

I do agree, reduction in ARPU, is always a cause of concern. It should be viewed together with cost per user, and churn rate. The ultimate importance, the net effect in sustaining earning, IMO

(vested)

Hi CF,

My thoughts on the matter is like this. While there is some creative packaging of various mobile plans, such as data only plan, or plans without contract and handset, the pricing has hardly "fallen" to deter competitors. Even if there is such intention, with the announcement of 3 potential entrants, we can safely say the intent has failed.

Textbook theory tells us newcomer will compete on price first, before a new equilibrium is reached. While there is reports about a different business models, I believe the price war is first and foremost salvo fire D and then the 4th player will try to building their niche market, both at the same time.

But I do agree fall in ARPU need to be look at totality. Given m1 do not give detailed breakdown of ARPU, it could be due to the falling international line revenue that is going obsolete anyway. The qn is whether the Coporate space and Broadband business's continue to grow to offset it?

All said, fundementals is but one of the equation, we need to look at valuation too