Axiata Group Bhd is starting to see the contributions from its 29.6%-owned Singapore associate M1 Ltd pick up. M1, a telecommunications player, recently announced a special dividend payout of 3.5 cents per share, which is earlier than analysts had expected.
In total, for FY10 ended Dec 31, M1 is paying out a cumulative dividend per share of 17.5 cents per share. Given that Axiata holds some 266.5 million shares in M1, this translates into a dividend income of S$46.6 million (RM110.9 million) for the Malaysian telco.
“The last time that M1 declared a special dividend was in FY07. With the special dividend, this brings its net payout to 100%,” said OSK Research.
The dividend income from M1 may be small compared to Axiata’s huge cash and bank balances of RM5.9 billion as at the end of September last year.
Nevertheless, the unexpected increase in dividend payout from M1 as well as other positive developments in the Singapore telco sector have started to bode well for Axiata’s investment in the Singapore telco, which is currently the smallest player in the market.
Axiata has previously said while its stake in M1 is small, it is optimistic on the Singapore telco’s prospects for growth as it works to capture more market share.
Recently, Axiata and M1 saw their share prices close at a high on Jan 17 after news broke that telcos in both countries, including Axiata, M1 and other players, had agreed in principal to slash roaming rate charges for travellers to and from Malaysia and Singapore.
Axiata ended last week at RM4.92 before while M1 closed last Friday at S$2.46.
However, analysts noted that it’s still too early to say what the impact will be from the move to clash roaming rate charges. According to reports, M1 is still awaiting directives from the Infocomm Development Authority (IDA) of Singapore on the matter.
The proposals had first been put forward by the relevant parties in both countries in 2008, with details to be announced over the next two months. According to OSK, some 12% to 15% of M1’s service revenues come from roaming, with a sizeable portion from Malaysia.
However, in the near-term M1 is still focusing on optimising Singapore’s Next Generation Nationwide Broadband Network (NGNBN).
“M1 is targeting the lucrative SME market for its NGNBN fixed line offerings and estimates that some 150,000 to 160,000 businesses remain under-served due to the lack of an alternative service provider. While no numbers were disclosed on NGNBN take-up to date, the management highlighted that registrations have doubled since the launch,” said OSK.
Following the announcement of M1’s FY10 results, which OSK said was in line with consensus and its forecasts, the research house tweaked upwards its FY11 and FY12 forecasts by 3% to 8%.
“This is to reflect the improved revenue traction, stronger data uplift and some revenue contribution from NGNBN,” said OSK.
Another potential boost to M1 would be its entry into the pay-TV, a business segment which is still at the early stages of development, thus giving M1 a more comparable head-start with its larger peers such as SingTel and StarHUB.
However, given that the cost of content is expensive, M1 has indicated that it intends to enter the market cautiously, staying away for aggressive bidding for the time being. - by Nadia S Hassan, theedgemalaysia.com
No comments:
Post a Comment