Keppel proposes M1 telco divestment to Simba Telecom for S$1.4 billion
[SINGAPORE] Keppel announced on Monday (Aug 11) its proposed divestment of M1’s telco business to Simba Telecom for an enterprise value (EV) of around S$1.4 billion.
The consideration will be fully paid in cash, and Keppel will receive close to S$1 billion in cash proceeds for its 83.9 per cent effective stake in M1.
Keppel said Simba Telecom had put forward the strongest bid at an “attractive valuation”, among interested parties. Its combination with M1 is expected to create more revenue pools and career opportunities, considering how they have the least overlap in resources.
The company is expected to receive cumulative cash of over S$700 million with the proposed divestment, coming after an estimated accounting loss of S$222 million excluding transaction costs (assuming the transaction occurred on Jun 30).
The actual loss on divestment to Keppel upon completion, however, will depend on the consideration, which is subject to post-completion adjustments and the carrying value of the assets relating to the proposed sale. This includes goodwill from the acquisition of M1 by Keppel in 2019, to be attributed to the assets of the divestment, at the date of completion.
Keppel first invested in M1 in 1994 as one of its founding members, and continues to retain M1’s information and communication technology business and certain assets excluded from the proposed transaction. It is said to represent an implied valuation of 7.3 times EV/earnings before interest, taxes, depreciation and amortisation.
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Loh Chin Hua, chief executive of Keppel, said the divestment is over and above the S$14.4 billion non-core portfolio that has been identified for monetisation, with about S$1 billion in cash to be unlocked to be channelled to growth opportunities.
“This will not only improve the New Keppel’s return on equity, but also support the market’s further re-rating of Keppel,” he added.
New Keppel refers to the group’s transformation into a global asset manager and operator, which began in 2024, as the company moves towards aligning with more new energy infrastructure and digital connectivity solutions.
Shares of Keppel closed Friday 0.8 per cent or S$0.07 down at S$8.58. The company called for a trading halt on Monday morning.
