This article first appeared in The Edge Financial Daily on September 25, 2018

KUALA LUMPUR: Axiata Group Bhd is not involved in the share transactions at M1 Ltd that the other substantial shareholders — Keppel Corp Ltd and Singapore Press Holdings Ltd (SPH) — are currently negotiating.

Four companies — M1, SPH, Keppel and its subsidiary Keppel Telecommunications & Transportation Ltd (KT&T) — requested to suspend the trading of their shares on Singapore Exchange (SGX) yesterday pending an announcement on possible share transactions in M1.

Axiata is the single largest shareholder of M1 holding 28.69% of the Singapore-listed telecommunications company, followed by KT&T (19.33%) and SPH (13.45%). Keppel owns its equity interest in M1 via KT&T.

In a statement to The Edge Financial Daily yesterday, Axiata clarified that it is not “an active participant in the new corporate exercise”.

Axiata noted that it will consider all appropriate and viable options that will enhance shareholder value depending on the official proposal to be made by Keppel and SPH.

Nonetheless, Axiata has in the past indicated its intention to divest its stake in M1 should the opportunity present. Based on M1’s last traded price of S$1.63 (RM4.93), Axiata’s stake is worth S$432.6 million.

As at press time, no detail was revealed to the investing public regarding the share transactions that Keppel and SPH intend to undertake at M1. Speculation is rife that the duo might have found a buyer for their stakes in M1, which could possibly result in a general offer.

In its filing with SGX yesterday, Keppel said the transaction involves its indirect interest in M1, which “may or may not” lead to a transaction for shares in M1.

“The company (Keppel) wishes to emphasise, in each case, that there is no certainty or assurance that any transaction will occur. If and when there are any material developments which warrant disclosure, the company will, in compliance with applicable rules, make further announcements as appropriate,” the filing read.

In a separate filing with SGX, SPH said it was approached by Keppel to participate in a “possible transaction” involving its indirect interest in M1.

SPH also stressed that there is “no certainty or assurance” that any transaction will occur.

When contacted, Hong Leong Investment Bank analyst Tan J Young commented that it might not be good timing for Axiata to hive off its stake in M1 given that the latter’s share price has drifted lower to price in the entrance of TPG Telecom, the fourth service provider in Singapore. M1’s share price has almost halved from the peak of S$3.15 in March 2015 to S$1.63.

“Furthermore, we do not think Axiata is desperate for cash now, and they have just called off their Pakistan tower acquisitions,” he said. Last week, Axiata’s 63%-owned telecom tower subsidiary edotco Group Sdn Bhd cancelled its planned US$940 million (RM3.88 billion) acquisition of Pakistan tower company Deodar Pvt Ltd.

Yesterday, Moody’s analyst Nidhi Dhruv commented that the cancellation is credit-positive for Axiata as the acquisition, if materialises, would result in Axiata having a debt-to-earnings before interest, taxes, depreciation and amortisation ratio of up to 2.5 times, which is the maximum leverage level for the group’s “Baa2” rating.