By Rishav Chatterjee and Yantoultra Ngui
SINGAPORE (Reuters) -Singapore’s Keppel is selling its 83.9% stake in subsidiary M1 Ltd to Simba Telecom while retaining the non-telecoms operations of its unit in a deal that will give the asset manager net cash of S$1 billion ($778.15 million).
Keppel said on Monday it will sell M1’s telecoms operations for an enterprise value of S$1.43 billion, and retain the fast-growing information and communications technology business, which also includes data centres and subsea cables.
M1 and Simba are Singapore’s third- and fourth-largest mobile operators by market share, trailing Singapore Telecommunications and StarHub.
“The proposed transaction offers a strategic path to sustainable growth for Singapore’s telco sector,” Keppel CEO Loh Chin Hua said in a statement.
Keppel said the deal would benefit the industry and consumers by consolidating the market and unlocking synergies between two digitally driven operators.
Backed by state investor Temasek, Keppel said the divestment aligns with its strategy to operate an asset-light model, and will sharpen its focus on digital infrastructure within its connectivity segment.
Keppel, which first invested in M1 in 1994 as a founding shareholder, said Simba had submitted the strongest bid among interested parties, and its combination with M1 is expected to create further revenue opportunities. It said it expects to record an estimated accounting loss of S$222 million on the deal.
Loh said the proceeds can be used for Keppel’s growth opportunities and lower its debt or reward its shareholders. “This will not only improve the new Keppel’s ROE (return on equity) but also support the market’s further re-rating of Keppel,” he added.
Shares of Keppel, which are under a trading suspension due to the deal announcement, have climbed 25.4% year-to-date, outpacing the 11.9% rise in the benchmark Singapore index, LSEG data showed.
Simba Telecom is wholly owned by Australia-listed Tuas. In a separate statement, Tuas said it is looking to raise at least A$416 million ($271.15 million) through a placement and share purchase plan.
M1’s operations, excluding the businesses that Keppel intends to retain, recorded revenues of S$806.1 million and an EBITDA of S$195.4 million in the year ended April.
Keppel said it hopes to complete the proposed transaction over the next few months, subject to regulatory approval.
DBS is the financial adviser to Keppel for the proposed deal, according to the announcement.
($1 = 1.2851 Singapore dollars)
($1 = 1.5342 Australian dollars)
(Reporting by Rishav Chatterjee in Bengaluru and Yantoultra Ngui in Singapore; Editing by Sherry Jacob-Phillips and Muralikumar Anantharaman)
