In August last year, Keppel announced the proposed sale of M1 to Simba for $1 billion in cash. However on May 18 the IMDA announced it has suspended the review of Keppel's planned sale of M1 to Simba. Given that approval from IMDA is one of the conditions required, the deal has been terminated.
“Given IMDA decision, the proposed divestment of our stake in the M1 telco business will be removed from Keppel’s announced monetisation for 2025. At our 1Q2026 business update, we announced our target to monetise $2-3 billion of non-core assets in 2026. This remains unchanged, and we will continue to work towards our monetisation target. In real terms for our investors, the impact is about seven to 11 cents per share in terms of special dividends. We will continue to explore opportunities for monetisation, so the special dividends have not gone away, they have just been deferred,” Loh Chin Hua, group CEO, Keppel, says during a briefing to analysts and media.
The special dividends are at the discretion of the Keppel board, but in FY2025, Keppel announced that it would pay out 10 to 15% of the monetisation received or realized in the financial year. To date, Loh says Keppel completed monetisations range from $300 million to $400 million this year.
Loh says Keppel will look for other non-core assets to divest. “The market conditions on for offshore rigs have improved,” he adds. Keppel still owns around six legacy rigs and offshore assets which are valued in the $3.5 billion to $4 billion.
“We are also working on some real estate potential, real estate monetisation, so between these and the rigs, we believe that we should be on target to hit $2-3 billion of monetisation for this year. For real estate, specifically, it includes Keppel South Central and also Keppel Plot Six. Plot six will be launched sometime in the middle of the year. Keppel South Central’s leasing is improving, and we believe that at some point when the leasing has reached a certain level, which we hope will be sometime this year, we will look at the monetisation,” Loh elaborates.
Part of FY2026’s ordinary dividend will comprise of the earnings from the sale of Keppel Merlimau Cogen to Keppel Infrastructure Trust for $128 million. Loh says any payout from the sale will be part of ordinary dividends. Keppel’s FY2025 ordinary dividends comprised 15 cents interim dividend and 19 cents final dividend. In addition, Keppel Sakra Cogen will be commissioned in the middle of this year Loh says.
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OCBC Credit Research says its base case assumes that disposals and operating cash flow continue to be sufficient to fund new acquisitions and investments. “If the deal to consolidate M1 and Simba lapses, the industry will be back to a four-player Mobile Network Operator (MNO) market, and price wars could intensify again,” OCBC Credit Research suggests.
According to Loh, for the M1 transaction, there were serious discussions involving at least two bidders.
“We understand that Starhub was previously interested in acquiring M1. If Starhub acquires, we think its credit metrics could be strained if the deal were to be funded by debt. However, a longer-term consolidation in the market should return pricing to a more rational level, which should restore margins and protect longer-term profitability,” OCBC Credit Research adds.
Keppel’s share price fell 2% on May 18, following the M1 announcement, but recovered from a mid-morning low when it was down 4%.
