With the introduction of the Open Electricity Market, telcos have begun their foray into the electricity market in Singapore. Telcos have started working together with electricity providers to sell electricity plans to consumers.
M1 is tying up with Keppel Electric, while Singtel is collaborating with Geneco. These partnerships between the telcos and electricity providers offer customers electricity plans at competitive prices bundled with promotions for the telco’s services.
In this episode of 4 Stocks This Week, we take a closer look at the how Singapore’s three largest telcos are doing, along with Keppel Corp, which is involved in taking M1 private and has a subsidiary (Keppel Electric) involved in the Open Electricity Market as a retailer.
M1 Limited (SGX: B2F)
M1 is Singapore’s third largest telecommunications provider in Singapore. M1 first received a buyout offer from Konnectivity, a joint venture firm by Keppel Corp and Singapore Press Holdings (SPH) in September 2018. Konnectivity provided a voluntary conditional offer of $2.06 per share for the remaining M1 shares.
Over the past few months, the price of M1 has fluctuated from $2.040 to $2.150.
This week, it has been announced that the percentage of public float is less than 10%, making the offer unconditional. This came after Axiata Group Bhd, with 28.67% stake in M1, accepted the offer of $2.06 per share.
The closing date was also extended to 18 March, after which M1 will be delisted from the SGX. Current shareholders that do not wish to hold onto M1 shares when they delist should consider accepting the buyout offer of $2.06 per share.
Singapore Telecommunications Limited (SGX: Z74)
Singtel is the largest telecommunications provider in Singapore.
This week, Singtel partners up with Axiata, another telecommunications provider. This partnership sees Axiata’s digital wallet Boost Malaysia joining Singtel’s cross-border e- payment network Via. This collaboration will allow Singtel Dash users to use their digital wallet in Malaysia. Singtel also announced their partnership with China Mobile to share their networks with the aim of improving the network infrastructure in Asia Pacific.
In FY18, Singtel increased its stake in Bharti Airtel, a telco in India, from 36.5% to 39%. This week Bharti Airtel announced their plans to raise funds to survive in India’s competitive telco industry, with Singtel likely to participate in this fundraising.
This week, Singtel’s price dropped below the $3.00 mark to close at $2.99.
StarHub Ltd (SGX: CC3)
Similar to Singtel and M1, StarHub previously partnered with Sunseap but have since pulled the plug on this collaboration in September 2018.
StarHub’s FY18 earnings fell 26.2% to $201.5 million, from $273.0 million in FY17. What got the market talking was StarHub slashing its dividends from 4 cents per quarter in 2018 to 2.25 cents per quarter for 2019.
While this was not a surprise to many, this saw StarHub’s share price to drop from $1.900 before the results were released to $1.590 at the end of 1 March.
The company’s dividend policy is also switching from a fixed dividend policy to a variable dividend policy in 2019, distributing at least 80% of net profit each year. This change in dividend distribution was said to be part of StarHub’s strategy to invest in future capabilities.
Keppel Corporation Limited (SGX: BN4)
With only three telcos listed in Singapore (down to two once M1 is delisted), our final stock this week is Keppel. Keppel Corp and SPH’s joint venture company Konnectivity is the company buying out M1.
Keppel Corp is one of the largest conglomerates in Singapore, having a business in property, offshore and marine, infrastructure and investments.
Since announcement of acquisition 27 September 2018, to the end of trading on 1 March 2019, Keppel’s share price has dropped from $7.160 to $6.130. During this period the share price reached a high of $7.300 and a low of $5.670.
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