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MyRepublic not buying M1: CEO
SETTING to rest months of speculation, fibre broadband services player MyRepublic said on Thursday that it was not interested in buying telco M1.
Instead, in order to fulfil it's mobile telco aspirations, the company will become an MVNO (mobile virtual network operator) in Singapore, buying mobile bandwidth wholesale from an existing telco to offer services which are likely to start in October.
It will join Circles.Life, which operates as an MVNO by leasing bandwidth from M1.
MyRepublic is also planning an initial public offering (IPO) towards the end of next year or early 2019. The size of the float or the listing stock exchange has not yet been finalised.
MyRepublic CEO Malcolm Rodrigues said that IPO proceeds would, among other things, help finance the growth of the company to eight other markets in South-east Asia (SEA).
The company already operates, apart from Singapore, in Indonesia, Australia and New Zealand.
The broadband services provider is in talks with private equity investors to raise S$100 million. This will be in addition to the S$120 million the company has raised since its inception in 2011.
Mr Rodrigues said that two-thirds of the money raised would be used to fund the company's broadband expansion in Indonesia, where it already has more than 100,000 customers, and is looking to hike that number to 1.3-1.4 million.
The remaining one-third would be used for customer acquisition costs across the region.
Mr Rodrigues said that the company started fundraising in May and expects to complete the process "within the next 60 to 90 days". MyRepublic is working with investment bank CLSA.
"We are looking for strategic financial partners. We think, from now and listing our company, we will grow three or four times, and three years beyond listing, we will grow 10-15 times," Mr Rodrigues said.
He added that the company's ambition was to become one of the leading telcos in the region. "We can build a business bigger than M1 within three years," he said.
Giving more details about the company's MVNO plans in Singapore, Mr Rodrigues said that a deal has been struck with one of the incumbent telcos and that the partnership would be announced within "one month to 45 days".
MyRepublic said that it received the green light from the Infocomm Media Development Authority of Singapore (IMDA) for its MVNO aspirations about a month back.
He added that the company was looking to leverage its fibre broadband customer base to get mobile phone customers and, at this point of time, it would be happy with a 5-6 per cent share of Singapore's highly saturated mobile telephony market.
MyRepublic added that, as an MVNO player, it could potentially break even with as low as 1.5 per cent market share.
Once the service stabilises in Singapore, the company is looking to introduce similar MVNO services in its other markets.
"We look at it as one company, one platform. To me, Australia is like Ang Mo Kio, it's just another region that we are extending our platform to. For me, to activate a service in Melbourne, or Changi, is the same process."
Mr Rodrigues said that the company had been exploring the option of becoming an MVNO since last year. However, its initial overtures to the incumbent telcos did not result in any positive feedback.
"Once TPG Telecom won its bid to become Singapore's fourth telco, I got calls from all three players with offers to collaborate with us, against a common enemy (TPG)," Mr Rodrigues added in a jocular vein.
He added that MyRepublic managed to negotiate a "good deal" with its partner telco. "We are excited about it and we will not just sell a SIM card but will sell our customers something that is different from what is available."
Giving some financial numbers, he said that the valuation of the business is more than S$500 million and the current round of fund raising is being done on that basis.
"In June this year, we reached 200,000 broadband subscribers across the region, with on average 17,000 new sign-ups per month and 100 per cent year-on-year growth."
MyRepublic has an annualised revenue run rate of S$110 million across the group, he added.
Apart from 100,000 broadband customers in Indonesia, MyRepublic has 70,000 customers in Singapore. Australia accounts for 28,000 customers and New Zealand, 15,000.
In Singapore, the company has been operating cashflow positive since mid-2016, he added.
"In Indonesia, we became Ebitda-positive in May 2017, less than two years since our launch with a strong local JV partner (Sinar Mas Group). In New Zealand, we forecast to be Ebitda-positive by December 2017 and Australia, by end 2018."
Ebitda is short for earnings before interest, tax, depreciation and amortisation.
Mr Rodrigues added that the company planned to launch TV services in the region to "turn the company into a quad-play provider". Quad play refers to voice, mobile data, fibre broadband and TV services.