Axiata CEO signals interest in raising stake in Singapore's M1

[KUALA LUMPUR] Axiata Group Bhd chief executive officer Jamaludin Ibrahim signalled Malaysia's biggest mobile-phone operator would be interested in raising its stake in Singapore's M1 Ltd as part of plans to turn the company into a bigger regional carrier.

"Strategically, it will be good for us to increase the stake," Mr Jamaludin, 57, said in an interview in his office in Kuala Lumpur last week, though he added that no negotiations were under way.

"If the price is right, we will seriously consider it."

Increasing its stake in M1 would build on Axiata's presence in South and South-east Asia, where it already controls operators in Indonesia, Sri Lanka, Bangladesh and Cambodia.

Still, Singapore is facing the prospects of mounting competition as the government is seeking to award the city-state's fourth license to run a mobile-phone carrier.

Axiata is M1's biggest shareholder with a 28.5 per cent stake, followed by the 19.2 per cent held by Temasek Holdings Pte Ltd's Keppel Corp, according to data compiled by Bloomberg.

People familiar with the matter said earlier this year that Temasek was weighing the possibility of Keppel selling its stake in M1.

For now, Mr Jamaludin said he's satisfied with Axiata's current holdings and isn't planning any major mergers and acquisitions.

"We are generally happy with what we have," he said.

"Realistically, even if I want to go into another country, the opportunity is not there or it doesn't make sense."

He singled out India as an example. Axiata has no plan to raise or cut the company's 20 per cent stake in Idea Cellular Ltd, the nation's third largest wireless carrier, as expansion in the country would require "huge" investments, Mr Jamaludin said. That's why they need partners like the Birla family, which controls Idea, he said.

The Axiata CEO also said that countries can afford to have three operators so that there's enough competition. In regards to Singapore's plan to have a fourth wireless carrier, he said that would result in "one too many" players in that market.

The plan for next five years is to build Axiata into a "digital generation" company. Mr Jamaludin is looking to expand the number of telecom towers in Asean and South Asia to 26,000 from 16,000 within three years and to eventually IPO the assets. He's comfortable with Axiata's debt levels being 2.5 times earnings before interest, taxes, depreciation and amortisation.

Despite management guiding for lower earnings in 2016, he's confident 2017 will be a different story. Axiata will probably post RM2.03 billion (S$674 million) in net income for 2016 and RM2.31 billion in 2017, according to the average analyst estimate compiled by Bloomberg.

BLOOMBERG