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Why business diversification of this telco won't ease investor worries just yet

Michelle Zhu
Michelle Zhu3/27/2018 11:28 AM GMT+08  • 2 min read
Why business diversification of this telco won't ease investor worries just yet
SINGAPORE (Mar 27): UOB Kay Hian is maintaining its “sell” recommendation on M1 with a target price of $1.60 on expectations of stiff market competition from the impending entry of TPG Telecom as Singapore’s fourth mobile operator in 2H18.
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SINGAPORE (Mar 27): UOB Kay Hian is maintaining its “sell” recommendation on M1 with a target price of $1.60 on expectations of stiff market competition from the impending entry of TPG Telecom as Singapore’s fourth mobile operator in 2H18.

In a Tuesday report, analyst Jonathan Koh highlights the increasingly urgent need for the telco to diversify its business and sources of revenue, especially given how its mobile business contributed to a “whopping” 76.7% of its service revenue in 4Q17.

While the analyst is cognisant of M1’s current efforts to reshuffle its revenue mix by expanding into corporate ICT and digital services as a new growth engine, as well as securing several multi-year contracts from government agencies and large corporations for various public sectors, he believes these new ventures will require a gestation period to scale up.

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