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Business

Singapore M1 shareholders drop plan to sell company as quarterly profit drops

SINGAPORE (Nikkei Markets) - The major shareholders of Singapore mobile operator M1 dropped plans to sell their controlling stake in the company after failing to get bids that met their requirements, underlining the decreasing appeal of the city-state's smallest telecom company.

The announcements by Axiata Group, Keppel Telecommunications & Transportation and Singapore Press Holdings came as M1reported worse-than-expected earnings, which it attributed to higher depreciation and interest expenses. Net profit for the three months ended June plunged 20.8% year-on-year to 32.5 million Singapore dollars ($23.8 million).

M1 also said it would cut its interim dividend to 5.2 Singapore cents from 7.0 Singapore cents.

M1, which has a market share of under 25%, has been hit by fierce competition as incumbents jostle to lock in customers ahead of the entry of a fourth player next year. The growing popularity of internet telephony and messaging services has also eaten into revenues as customers make fewer international calls.

Axiata owns around 29% of M1, while Keppel T&T and SPH hold around 19% and 13%, respectively. The three companies have been looking for buyers for the Singapore mobile operator since March this year.

Although M1's revenue in the latest quarter rose 4.7% from a year ago to S$251.6 million, the increase was due to higher sales of handsets and stronger revenue from fixed-line broadband services.

Mobile services revenue, which is the recurring income from subscribers, fell 2.1% to S$159.5 million in the three months ended June. Stockbrokers RHB said M1's mobile services revenue had been contracting for more than two years.

"The majority shareholders have taken into consideration the proposals from interested parties, which despite a favorable level of interest, have not met the minimum criteria and parameters as determined by the majority shareholders," SPH said in a statement.

Malaysian telecom giant Axiata and Keppel T&T, a unit of offshore marine and property conglomerate Keppel Corp, also issued similar statements.

"This is a slightly negative development," said Hong Leong Investment Bank analyst Tan J Young. "We would prefer Axiata to sell off stakes in associates and operating companies in which they do not have management control and release more cash to pare down their debt."

Looking ahead, M1 said it expects net profit to decline this year but added that it was well positioned to capture new opportunities presented by the digital economy.

"We have been investing in NB-IoT (narrowband Internet of Things) network and digital solutions, and expanded our offerings to include managed infrastructure services, cyber security, business solutions and analytics," M1 CEO Karen Kooi said in a statement. "This would enable us to better serve our customers and generate new revenue streams for future growth," she added.

--Kevin Lim and Jason Ng

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