Investment set to unlock value and boost income resilience
Keppel DC Reit and M1 have finalised agreements for a landmark deal that will monetise S$580 million worth of M1’s network assets. The transaction involves Keppel DC Reit investing S$89.7 million into bonds and preference shares of M1’s new subsidiary, M1 Network (NetCo).
Details of the Deal
NetCo will acquire M1’s mobile, fixed, and fibre network assets through an asset transfer agreement. Under a 15-year network services agreement, M1 and its virtual network operators will lease network capacity from NetCo, while retaining responsibility for operations, maintenance, and capital expenditure.
NetCo will fund the acquisition with up to S$493 million in external financing and S$89.7 million through unsubordinated bonds (bearing 9.17% interest) and preference shares. Keppel DC Reit will subscribe to these instruments, receiving S$11 million annually in principal and interest for 15 years.
Strategic Implications
M1 CEO Manjot Singh Mann highlighted that the deal aligns with Keppel’s Vision 2030 asset monetisation strategy, enabling M1 to fund growth initiatives and solidify its position as Singapore’s first digital network operator.
Keppel DC Reit CEO Anthea Lee emphasised that the investment aligns with the Reit’s strategy of income diversification and stable distributions, while enhancing access to capital markets. The arrangement is expected to be accretive to the Reit’s distribution per unit (DPU) over the next 15 years.
Governance and Market Reaction
NetCo’s board will include equal representation from both M1 and Keppel DC Reit. The transaction is subject to regulatory and shareholder approvals, with completion anticipated by year-end.
Following the announcement, Keppel DC Reit units gained 1.3%, closing at S$2.39, while Keppel Corp shares rose 2.1% to S$5.41.
