M1 could dominate $16b B2B connectivity market with Keppel tie up

The telco aims to boost its subscriber market share and reduce overall opex.

M1 intends to ride on the synergies of being a part of Keppel Group in order to enhance its B2C and B2B offerings, a market that is said to be worth $16b, according to a note by UOB Kay Hian.

The report noted that since the start of the year, M1’s new team has been making moves for M1’s transformation. Key changes to-date include the increase net adds through B2C tariffs within Keppel Group, increase the share of transactions via digital channels, physical channel cost reduction and improved internal processes such as fixed line activation.

Some of the telco’s near-term focus is to increase subscriber market share (24% currently) and reduce overall opex. M1’s ROE target is 25% (2018: 25.8%) as competition remains intense albeit inherent ARPU upselling potential with the Keppel Group.

M1 is also looking to aims to strengthen its current offerings (e.g. OnePlan) and develop new markets. Keppel had mentioned that following the launch of M1’s OnePlan in May, more than 50,000 new customers have signed up for it. In addition, good customer engagement has led to a higher net promoter score (NPS) vs peers.

As for IMDA’s 5G roll-out plan, UOB Kay Hian analyst Chong Lee Len that the announcement would prompt Starhub and M1 to form 5G network joint ventures.

Also read: M1 and StarHub may collaborate for 5G roll-out

“5G puts M1 in a leading position to capitalise on various business cases given its broad-based businesses in Singapore,” said Len.

However, the report stated that the 5G rollout will likely intensify competition, especially with the entry of TPG Telecom. Pricing erosion could also worsen and may elevate capex spending with revenue capped in the case of no network sharing.