FILE PHOTO: A Keppel signage is pictured in their office in Singapore July 6, 2023. REUTERS/Edgar Su/FIle Photo
SINGAPORE: Asset manager and operator Keppel says it is selling the telecom business of its subsidiary M1 to rival Simba Telecom.
The deal has an enterprise value, which includes cash and debts, of S$1.43bil, subject to post-completion adjustments.
Keppel will receive nearly S$1bil in cash proceeds for its 83.9% effective stake in M1.
It will retain the fast-growing information and communications technology (ICT) business, which also includes data centres and subsea cables.
Keppel said it hoped to conclude the transaction in the next few months, subject to approval by the Infocomm Media Development Authority.
It said approval from Keppel shareholders is not required, as the relative figures from the proposed transaction do not exceed 20% of Keppel’s net asset value, profit before tax and market capitalisation.
Approval from Simba shareholders is also not required for the deal, Keppel added. Simba is owned by Australia-listed telco Tuas.
Keppel said in a statement: “The proposed landmark transaction is expected to benefit Singapore’s telecommunications sector and consumers through market consolidation and harnessing synergies between two of the nation’s agile and digitally driven telcos with strong track records for innovation.
“It brings together M1’s digitally transformed, cloud-native network with its ability to deliver hyper-personalised services through an advanced tech stack and Simba’s innovative digital consumer model.”
Keppel also said Simba had put forward the strongest bid from among interested parties, with a compelling all-cash offer at an attractive valuation.
Simba and M1 also have the least overlap in resources, which Keppel said is expected to create further revenue pools and career opportunities.
The pooling of resources is set to create a nimble and competitive digital-first telco to power Singapore’s digital economy, Keppel added.
The transaction represents an implied valuation of 7.3 times enterprise value to earnings before interest, taxes, depreciation and amortisation (Ebitda).
The sale has been widely anticipated by market watchers, though speculation had centred on StarHub instead of Simba as the likely buyer up till the latest announcement.
M1’s operations, excluding the businesses that Keppel intends to retain, recorded revenues of S$806.1mil and Ebitda of S$195.4mil in the year ended April.
Keppel said: “The proposed divestment is in line with our strategy as an asset-light global asset manager and operator, and will sharpen the firm’s focus within its connectivity segment on digital infrastructure.
“Despite an estimated accounting loss to Keppel of S$222mil, the transaction crystallises value from Keppel’s investment in M1 over the years.”
Keppel also said it expects to receive more than S$700mil in cumulative cash, after considering Keppel’s initial investment in M1 in 1994 as one of its founding members and the subsequent privatisation of the telco, as well as dividends and divestment proceeds from 1994 to 2025. — The Straits Times/ANN
