M1 (formerly: MobileOne)

[LionFlyer]

Apples and oranges.

IMDA is about achieving a public good (e.g lower prices from higher competition), which does not translate to good news in a close market because it means the pie needs to be split between more players. TPG's considerations would be quite different.

[weijian]

Published CapEx of M1, contains more than replacement CapEx. I would suggest using depreciation & amortization expenses, as a proxy to estimate the replacement CapEx. The high published CapEx in the last few years was due to non-occurrence spectrum renewal cycle, and data center investment.

The last five-year average "replacement CapEx" (based on depreciation and amortization) is S$117 million, with average OCF S$285 million. The average FCF should be around S$168 million.

Average dividend paid over the same period, was S$154 million, with a ratio of ~90%

M1 profitability is declining with keener competition ahead. Big Data technology might make a difference in near future with quality data owned by operators. TPG's boss wouldn't spend billion to enter a sector unless promising outlook ahead, IMHO.

(vested)

hi YMPL,
Thanks for your first (quality) post. I reckon you are one of VB's silent readers who eventually can't resist and decide to register and join in the discussion. Looking forward to more sharings in future.

Thanks for your clarification on the CAPEX, since i haven't followed up closely on M1 enough to be able to calculate them differently. A ratio of 90% FCF does seem to have little margin of safety. Using past 5 years average sounds "statistically robust" enough but could be dangerous in practice when the business faces pending certain headwinds. My past experience with all these tells me over-dependence on these numbers, might have a good chance of something bad happening. That said, TELCOs are good businesses and so it is always about the price (once the dust settles...)

[weijian]

Apples and oranges.

IMDA is about achieving a public good (e.g lower prices from higher competition), which does not translate to good news in a close market because it means the pie needs to be split between more players. TPG's considerations would be quite different.

I do agree one needs a good understanding of TPG and its track record to be able to make the insider call of why exactly they are entering the market. An investment premise simply based on "They are entering --> so it must be good" may not hold up to be exactly true.

IMO, I observed SG Gov have been under-reacting for many years (housing, roads, railways, 2 public transport operators model?) and they have had enough time to learn their lesson. Investors also tend to forget that there is still a difference between the company earning a profit, and the investor earning a profit (from his equity stake in the business)

[holymage]

I think maintenance capex would be the more appropriate term. If spectrum rights is required for M1 to maintain their current revenue level, it should be classified as maintenance capex. This is similar to renovation of retail stores to continue attracting customers, and semiconductor companies upgrading of equipment to remain technology relevant. That being said, I am not familiar with the telecommunications technology or business.

On the other hand, if data center investments will generate new pockets of additional revenue instead of sustaining current revenue, then yes, it should be classified as growth capex.

Another way to estimate maintenance capex would be Professor Greenblatt's fixed-assets-to-sales method.

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[YMPL]

 TPG's boss wouldn't spend billion to enter a sector unless promising outlook ahead, IMHO.

(vested)

So, on that same score, IDA would not have called for Expression of Interest and thereafter Tender if the market cannot sustain a fourth Telco?

Based on past record with Virgin Mobile, IDA initiative isn't a good base for the speculation. IMHO, TPG's boss past record might be a more credible one.  

http://sbr.com.sg/telecom-internet/news/...urth-telco

[YMPL]

M1 halted, together with its shareholder KTT. There is a sudden hike in market price before the halt. News leak might be the reason.

http://infopub.sgx.com/Apps?A=COW_CorpAn...09fdcd49c0

[cyclone]

M1 halted, together with its shareholder KTT. There is a sudden hike in market price before the halt. News leak might be the reason.

http://infopub.sgx.com/Apps?A=COW_CorpAn...09fdcd49c0

SPH is also halted. Both are substantial shareholders of M1. 
Keppel T&T to sale M1 to SPH ? or Both are selling M1 ?

[edragon]

Key shareholders of Singapore telecom firm M1 evaluating stake sales

[BlueKelah]

the Malaysian axita co. Looks like not doing too well, probably they are the ones who decided to sell M1

Good move though, m1 biz looks to be not so good in the near future.

Problem is who wanna buy lol, maybe ah tiong?

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[thor666]

the Malaysian axita co. Looks like not doing too well, probably they are the ones who decided to sell M1

Good move though, m1 biz looks to be not so good in the near future.

Problem is who wanna buy lol, maybe ah tiong?

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On the contrary, i think axiata might want to buy sph and keppel stakes. Axiata biz and vision seem like following vodafone regional/global strategy of multiple telco investments.

We shall see..


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