Here's why firms may be interested in M1's potential sale

Singapore has a close to 150% telco penetration rate.

With the news of the potential sale of Singapore telco giant M1 amidst the strategic review being conducted by its key shareholders – Keppel T&T, Axiata Group Bhd (Axiata) and SPH – investors will be taking the chance of grabbing a slice of Singapore's competitive telco market.

According to DBS, there are four reasons why potential bidders would be interested in M1:

For starters, foreign telcos with strong cash and balance sheets may be looking to expand their reach beyond their home bases. DBS explained that telco takeover deals may be hard to come by as regulators might attempt to block such deals, citing antitrust concerns, or national interests at stake. However, Singapore's mature telco market with close to 150% penetration rate and good telco infrastructure in place may attract foreign investors to place their bids on the table for M1.

DBS added that PE firms that may have existing stakes in other foreign telco or telco assets may be interested in taking M1 private, with the possibility of relisting the entire portfolio of telco assets thereafter.

Firms within the telco sphere such as telco equipment manufacturers may also express their interest in investing in telcos to expand their reach along the value chain.

Other companies not belonging to the already given firm categories may be interested in M1 as this could be an opportunity for them to make a foray into the telco scene and diversify.