M1 (formerly: MobileOne)

[Shrivathsa]

It would be a strange time to sell M1 and Keppel REIT stakes.

Keppel spent a lot of money taking over Keppel Land and it is benefiting from that.

Keppel REIT is very useful as a vehicle to lighten Keppel Land (Keppel Corp) 's balance sheet (imo), not saying that is right or that is what they do, just highlighting that Keppel REIT has in the past been able to buy out properties from Keppel Land.

Property is an area they do not want to divest.

M1, a better time would have been two years back, before the rout due to the 4th operator.

Keppel in general, is a very disciplined capital allocator. (One of the better ones in Singapore).

Hence, I doubt that they would be inclined to do this divestment.

[Stephen]

Was listening to the Q and A, wondering why people are more negative about M1 than Singtel and starhub as evidenced by the share price drop....

Netflix is a big thing and i have stopped my starhub subscription for Netflix, including my friends and some have even been using the so called Black Box to illegally mirror starhub's programmes which is a technology different from the previous black box where starhub managed to block.

M1 has all to gain ( or least to lose) than starhubs ( less so singtel) as their so called hubbing strategy is now going to be defunct.

Shrivathsa, are u the analyst in the Q and A? Totally agree with you about it being a strange time to sell M1 stakes and Keppel Reit....

vested

[CityFarmer]

Was listening to the Q and A, wondering why people are more negative about M1 than Singtel and starhub as evidenced by the share price drop....

Netflix is a big thing and i have stopped my starhub subscription for Netflix, including my friends and some have even been using the so called Black Box to illegally mirror starhub's programmes which is a technology different from the previous black box where starhub managed to block.

M1 has all to gain ( or least to lose) than starhubs ( less so singtel) as their so called hubbing strategy is now going to be defunct.

Shrivathsa, are u the analyst in the Q and A? Totally agree with you about it being a strange time to sell M1 stakes and Keppel Reit....

vested

I reckon, the recent price movement, is still a continue reaction to likelihood of 4th operator, and its impact, rather than on Neflix entry into the market.

(vested)

[BaronWaffet]

I believe this thread was started on the basis that the author read the report on Temasek having a meeting to discuss the possible sale of M1.

I have written Keppel a strong worded letter clarifying this situation. Their replies are on the Kep Corp thread on 29 Feb

http://www.valuebuddies.com/thread-745-page-47.html

[CityFarmer]

The subsidy has increased further from reserved price of $40m to $35m...

IDA to hold spectrum auction in 3Q to facilitate entry of 4th telco

SINGAPORE (Feb 18): The Infocomm Development Authority of Singapore has unveiled a spectrum allocation framework to facilitate the entry of a new mobile network operator (MNO) to boost competition in the mobile market.

IDA will make available 60 MHz of spectrum from the 900 MHz and 2.3 GHz bands for the New Entrant Spectrum Auction, at a starting bid price of $35 million, down from $40 million originally.

The New Entrant Spectrum Auction will take place in 3Q2016, and spectrum rights for the new entrant will commence in April 2017.

A General Spectrum Auction will be held after the conclusion of the New Entrant Spectrum Auction and be open to the incumbent MNOs - M1, Singtel and StarHub - as well as any new MNO which emerges.
http://www.theedgemarkets.com/sg/article...-4th-telco

[Shrivathsa]

Was listening to the Q and A, wondering why people are more negative about M1 than Singtel and starhub as evidenced by the share price drop....

Netflix is a big thing and i have stopped my starhub subscription for Netflix, including my friends and some have even been using the so called Black Box to illegally mirror starhub's programmes which is a technology different from the previous black box where starhub managed to block.

M1 has all to gain ( or least to lose) than starhubs ( less so singtel) as their so called hubbing strategy is now going to be defunct.

Shrivathsa, are u the analyst in the Q and A? Totally agree with you about it being a strange time to sell M1 stakes and Keppel Reit....

vested

I reckon, the recent price movement, is still a continue reaction to likelihood of 4th operator, and its impact, rather than on Neflix entry into the market.

(vested)

Hi Stephen,

Sorry for the delay in reply.

No, I am not the analyst on the call.

Well, from today's news, the 4th operator news is confirmed.

So, the market was right in selling down M1.

Ah well, one loses some, one wins some.

Singtel, people are okay because Singtel is more a Asia telecom play in people's minds, whether that is true is debatable. They also may see Singtel as a good company to use to acquire telecom assets across Asia. One can and may question the "acquisition success " ability of Singtel, but that is probably a topic for the Singtel forum.

On Starhub, I think the spin is that when you get cable,broadband and mobile it is a good deal and builds loyalty and there is significant growth of this hub base. Basically a discounting strategy. You are right the weakness is when people ' cut the cord'. That is reaching tipping point in USA. So, like other trends it should hit Singapore/ Asia in a while.

M1 is seen as a pure mobile play I.e. the most direct competition to the fourth operator. Logically, if M1 is winning on price, then the new operator will undercut the others on price and M1 customers will be the first to switch.

Hope that helps.

[CityFarmer]

M1 started share-buy-back today. IIRC, there was no similar action, since vested for years.

http://infopub.sgx.com/Apps?A=COW_CorpAn...bc004963d7

(vested)

[d.o.g.]

On Starhub, I think the spin is that when you get cable,broadband and mobile it is a good deal and builds loyalty and there is significant growth of this hub base. Basically a discounting strategy. You are right the weakness is when people ' cut the cord'. That is reaching tipping point in USA. So, like other trends it should hit Singapore/ Asia in a while.

Personally, I used to be a "hub" customer for Starhub. But they recently lost the plot and forgot that hubbing is supposed to save the customer money. They deleted my cable internet plan (no longer available) in order to push me towards their Dual Broadband plans. So I moved to M1 fibre, faster and cheaper. For mobile my contract was up but their discounted SIM plans were not competitive, again I moved to M1 and got more minutes and more data for less money. Now I only have the cable TV subscription, who knows for how much longer. My bill for all 3 services is now cheaper than when I had the Starhub triple play.

Of course, this is only my experience, but I do not believe I am the only one.

With the 4th telco, things are going to get bad for the Singapore carriers, but they only have themselves to blame for abusing their customers. Just look at broadband speeds: in 2008, before the government decided to build the fibre optic network, internet speeds did not reach 10Mbps, while in South Korea 100Mbps was already common. Now you can get 10Gbps, 1000x faster. OpenNet made MyRepublic and ViewQwest possible, and they in turn made fibre affordable.

Kudos to IDA for pushing for a 4th operator. Of course, the immediate effect is a price war, since quality of service is already taken for granted (good in town, bad in remote areas). Importantly, the longer-term outcome is not just lower prices but better service, especially for data. I am sure many people in Singapore have had the experience where their phone says "4G" but data service is very slow or unavailable, and when they travel to remote areas their phone switches to the Malaysian or Indonesian networks. Claiming 4G but delivering 2G speed, and a stronger signal from a foreign telco than from a local telco. These point to underinvestment in the network by the incumbents. The 4th operator will help cure this absurdity.

As a mobile phone subscriber, I am very pleased about the 4th telco. As an investor, I would be cautious about M1 and Starhub given the obvious impact. For SingTel, the Singapore consumer business is quite small relative to the other businesses so the impact will be more muted.

To understand the impact of a price war, look at India, Indonesia and Malaysia. Thailand looks likely to have a price war too given the recent spectrum auction results. In HK a price war just ended after HKT bought CSL. It is an interesting time to be an Asian telco investor. Certainly not a buy-and-forget type of investment in this day and age.

As usual, YMMV.

[CityFarmer]

Nomura's view on the 4th telco. Let me share my view on the likelihood of the 4th telco.

The value-proposition of new telco, are full 4G data network, and lean biz processes. In fact, it is very attractive in paper. A full 4G network, is easier and cheaper to deploy, especially with lower-end of spectrum offered. One of the challenges for 4G-data-only network, is the voice connectivity. It seems there is a solution with VoLTE, but without a fall-back to 3G-voice, the QoS is difficult, if not impossible to achieve. MyRepublic solution, is to introduce a "Skype-like" app for voice connectivity i.e. a D-I-Y solution(?) 

The lean biz processes, are mainly D-I-Y type of services. It may work, but it might be good reasons the local incumbents are not doing it, since the technologies are commonly available. In fact, based on the usage of "self-service-apps" from the three (3) telco, I am very skeptical on the acceptance of the lean biz processes.

MyRepublic is testing the "innovations" with a small group of users now. The possibility of the 4th telco, is depending on the result. IMO, the 4th telco isn't a done deal yet.

Any comment on the view above?

(vested)

M1 upgraded to ‘buy’ by Nomura on valuation, 4th telco

SINGAPORE (Feb 22): Nomura has upgraded telco M1 to “buy” rating and lifted its target price to $3.30 from $2.95 partly on valuation grounds.

Nomura points out that M1’s stock is down around 36% since January 15, compared with a 20% loss in the market and that it is trading at an attractive price-to-earnings ratio of 13.8x.

In addition, the threat of a fourth mobile entrant in the Singapore market may have been overblown.

The research house notes that government proposals to provide a low mobile spectrum reserve price to a fourth entrant “suggests to us that the economics or likelihood of a new full-fledged player emerging could be even lower" than previously thought.

As at 12.13pm, M1 is up 0.39% at $2.55 while the Straits Times Index is up 0.08%.
http://www.theedgemarkets.com/sg/article...-4th-telco

[CityFarmer]

Let me share my view on the new mobile operator. Feel free to comment.

(vested in M1)

Is a new mobile operator, done deal?

IDA has reduced the spectrum reserve price for new mobile operator, and effectively an 70% discount to the new operator. Nevertheless no concessions in regulation, and mandatory inter-operator roaming, have been given.

The new operator, is unlikely to join and compete on price alone, as highlighted by SingTel's CEO. No investor is interested to participate with big money, on price-war alone, without anything new.

Based on initial disclosures from MyRepublic and OMGTel, the business plan, in brief, is
• a 4G-only network, or as termed by MyRepublic, a “Next Generation pre-5G network”, and
• a lean customer service model, supported by IT technologies.

It is a good plan on paper. A 4G-only network, will greatly reduce the required initial capital, due to a much higher spectral efficiency of 4G vs 3G. A lean service model, with minimum physical stores and mostly online customer service, is more cost efficient than existing service model of incumbents.

IMO, the execution of the proposal, isn’t a done deal. Lot of rough corners to be cleared before investors are willing to put in the money.

Firstly, a 4G network, need to fall back on 3G network, in order to achieve the required voice call QoS, even with the latest VoLTE (Voice over LTE). The new operator’s proposed solution, is an offline Skype-like App, or/and service roaming to incumbents’ networks. Both aren’t elegant and effective solution to me, in business sense. Which incumbent will offer the service, and at what price, if it ever happen?

Next, the lean service model. The service model might not be scale-abled to a larger group of mobile users. The model served well now, with a much smaller broadband user in low tenth of thousands, and relatively simpler service. It may be a totally different case, with more complex mobile service, and close to a million mobile users (assuming 10% market share).

What is your view?