Singaporean fixed and mobile operator M1 and its shareholder Keppel Corp – acting through Keppel DC REIT Management – have announced the signing of a non-binding term sheet to create a special purpose vehicle (SPV) to own and operate M1’s network assets. In a joint media release (28 April), it was confirmed that under the proposed transaction, ‘it is contemplated that: (i) M1 will establish the SPV, and the SPV will acquire the network assets from M1 at a cash consideration of approximately SGD580 million [USD437.4 million], equivalent to the net book value of the network assets as at end February 2021, (ii) the consideration for the acquisition of the network assets will be funded by the SPV through (a) external financing of approximately SGD493 million, and (b) Keppel DC REIT’s investment of approximately SGD87 million in return for a combination of debt securities and preference shares to be issued by the SPV, (iii) M1 will continue to retain 100% of the ordinary shares in the SPV. It is also intended for the SPV to enter into a 15-year Network Service Agreement with M1, under which the SPV will contract its network capacity to M1, and M1 will undertake the operations and maintenance of the network assets, and (iv) the board of the SPV will have equal representation from M1 and Keppel DC REIT.’ In other words, while M1 will retain 100% of the SPV’s ordinary shares, M1 and Keppel DC REIT will be equally represented on the board of the SPV.
Manjot Singh Mann, CEO of M1, said: ‘The proposed transaction involving M1’s network assets is part of the Keppel Group’s asset-light business model under Vision 2030. Realising value from M1’s network assets will free up capital that can be used to help M1 invest in new capabilities and also fund other growth initiatives.’
The proposed transaction is subject to all necessary due diligence, and regulatory and shareholder approvals. M1 is jointly-owned by Keppel Corp and publisher Singapore Press Holdings.