SINGAPORE (Oct 14): DBS Vickers is maintaining its “fully valued” rating on M1 with a lower target of $2.60 from $2.94 previously.

In a research note out on Wednesday, analyst Sachin Mittal expects M1 dividend payout to be lowered to 90% versus 100% last year in the face of higher competition.

M1 is also not cheap at 15x FY16F PE keeping in mind that earnings are likely to decline from FY17F onwards.

As of now, Singapore’s likely fourth telco MyRepublic has completed a funding round to raise $23 million in Sept.

Brunei’s largest telecom operator, DST Communications, was among the major investors.

MyRepublic estimates that it requires $250 million capex for the network rollout, the bulk of which could be raised through vendor financing.

“M1 could be more impacted than its peers due to (i) more price sensitive user base; (ii) lesser number of subscribers on bundled offerings; and (iii) larger exposure to the mobile sector as a percentage of group revenue,” says Mittal.

DBS expects a 10% adverse impact on revenue by 2022 due to the fourth player, assuming 7% revenue share for the fourth mobile player and a 10% adverse impact on M1’s revenue in 2022 versus 4% for StarHub.

M1 is up 0.4% to $2.88 as at 1.03pm, compared to a 0.1% rise in the Straits Times Index.