Keppel proposes M1 telco divestment to Simba Telecom for S$1.43 billion
The consideration will be fully paid in cash, and Keppel will receive close to S$1 billion in cash 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 parent company of Simba Telecom, Australian-listed Tuas Limited, said in a company statement on Monday that it seeks to raise A$416 million (S$348.4 million) in equity by way of a non-underwritten institutional placement and share purchase plan to fund the acquisition, in addition to existing cash. The funding will also be supported by S$1.1 billion of fully underwritten bank debt financing.
The floor price for the offer will be A$5.24 per share representing a 4.9 per cent discount to Tuas' closing price on Friday. The institutional placement will be about A$366 million based on the floor price.
Tuas is also undertaking a share purchase plan (SPP) for eligible shareholders to raise around A$50 million. New shares under the SPP will be issued at the lower of placement price and 2 per cent discount to the five-day volume-weighted average price up to, and including, the closing date of the SPP.
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Upon completion, Tuas expects its pro-forma debt to earnings before interest, taxes, depreciation and amortisation (Ebitda) leverage ratio to be about four times, and aims the finish the acquisition 'over the next few months', which is set to be 'highly earnings per share (EPS)-accretive for shareholders from year one'.
Tuas is one of the companies in the TPG Telecom Group, and was incorporated in March 2020. The company noted it is on track to meet outlook expectations laid out in its H1 FY2025 guidance, and will announce its full-year FY2025 results on Sep 24.
The sale is said to represent an implied valuation of 7.3 times EV/Ebitda. 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.
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 cash from the sale to go 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.
This sentiment had been clear since late July 2025, given how the telco market is under 'severe competitive pressure' with four operators and around seven mobile virtual network operators, said Manjot Singh Mann, chief executive of Keppel's connectivity segment.
For H1 FY2025, the group's revenue in this segment , which includes data centres and telco M1, rose 13.9 per cent to S$742.4 million. The same segment's net profit, however, declined 16.9 per cent to S$57.5 million, on the back of lower overall earnings from M1, in addition to valuation gains on sponsor stakes in private funds.
Mann previously highlighted the wave of SIM-only plans replacing contract plans, a trend that has diluted average revenue per user amid an 'overcrowded market'.
Keppel for the same half-year period reported a 24.2 per cent year-on-year increase in net profit to S$377.7 million, translating to an EPS of S$0.208, up 23.1 per cent from S$0.169 a year prior.
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.
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