Neil Montefiore is to resign as M1's CEO on 1st February to "pursue other personal interests".

This development is clearly unexpected. Although we had previously high-lighted management succession as a concern given Mr. Montefiore's long tenure, when we last raised this issue with him, he iterated his strong commitment to M1 (see Meeting the CEOs ; 5 Sept 08). Furthermore, as well as being unexpected, his resignation comes at a potentially difficult time for M1 as it develops and executes its fixed broadband / triple-play strategy, and as the competitive environment remains relatively difficult. It should also be noted that Mr. Montefiore was synonymous with M1's strategy (he has been CEO since pre-launch), he was widely liked within the company (we believe his departure has disappointed many employees) and he had a good industry reputation.

Clearly the sudden nature of Mr. Montefiore's resignation is unwelcome and although Karen Kooi (the CFO) will become acting CEO (ensuring some continuity), few companies can function well without a permanent CEO. But M1's near-term relative operational and financial performance is currently determined more by quarterly tactical campaigns rather than big strategic initiatives requiring a CEO's vision and from that perspective M1 should be able to maintain its current momentum, even without Mr. Montefiore. In addition, the NBN OpCo bid has been submitted and we assume Ms. Kooi will maintain Mr. Montefiore's fixed/NBN strategy in the interim. But the quicker the board appoints a new high quality CEO with a well-defined strategic vision for one of Asia's smallest telcos, the better for investors. And the longer M1 functions without a permanent CEO, the greater the worries.