Asset manager Keppel Ltd said on Monday (Aug 11) it will sell the telecom operations of its subsidiary M1 to Simba Telecom for an enterprise value of S$1.43 billion.
The transaction is expected to be completed over the next few months, subject to regulatory approval by Singapore’s Infocomm Media Development Authority (IMDA). If completed, this will represent the first-ever consolidation in Singapore’s telecommunications sector and increase Simba’s share of the local postpaid market from 14.4% to 38.3%.
Keppel will receive S$1 billion in cash proceeds for its 83.9% stake in M1. It will retain M1’s “fast-growing” information and and communications technology business, which it said will complement Keppel’s integrated connectivity business that includes data centres and subsea cables.
CEO of Keppel Ltd, Loh Chin Hua, said that the landmark transaction would benefit Singapore’s telecommunications sector and consumers through market consolidation and by “harnessing synergies” between the two 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,” he added.
Simba submitted the strongest bid from among interested parties, presenting a compelling all-cash offer at an attractive valuation, Keppel said. While Keppel expects to record an estimated accounting loss of S$222 million, the merger of Simba and M1 is expected to create further revenue opportunities, particularly given the minimal overlap in their resources.
By pooling their assets, the combined entity is poised to become a nimble, competitive, and digital-first telco, driving Singapore’s digital economy forward.
M1’s operations, excluding the businesses that Keppel intends to retain, recorded revenues of S$806.1 million and EBITDA of S$195.4 million in the fiscal year ended April.
Simba’s parent company Tuas said it is looking to raise at least AU$416 million (S$348.4 million) through a placement and share purchase plan.
Tuas hailed the planned purchase of M1’s telco business as a “transformational” step, adding that “the acquisition will expand Simba’s mobile position, accelerate the expansion into broadband and provides an established enterprise platform.”
Based on a regulatory filing on the Australian Securities Exchange (ASX), Simba currently holds 1.5% share of Singapore’s prepaid mobile market, 14.4% share of the postpaid mobile market and 0.9% of the broadband market share.
The filing also states that M1 now has 13.5% of Singapore’s prepaid mobile market, 23.9% of the postpaid mobile market and 15% of the broadband market.
If the acquisition goes through, Simba’s share of the postpaid market would see a sharp jump to 38.3%. It would also capture of 15% of Singapore’s prepaid mobile market, and 15.9% of the broadband market.
Currently, M1 serves over two million customers, while Simba has more than one million mobile subscribers.
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