Australia’s Tuas Cancels $1.1 Billion M1 Deal After Singapore Telecom Investigation
Synopsis
Tuas has terminated its planned US$1.12 billion acquisition of Keppel’s stake in Singapore telecom operator M1 after a regulatory investigation raised concerns about Simba Telecom’s use of radio spectrum. The Singapore telecom regulator recently paused its review of the deal after finding signs Simba may have used frequency bands not officially assigned to it. Tuas shares fell sharply following the announcement, adding to heavy losses earlier this week after the investigation became public. Keppel said the failed transaction is not expected to create any immediate financial impact, though uncertainty remains around Simba’s regulatory future in Singapore.
Australia’s Tuas Ltd has cancelled its S$1.1 billion plan to buy Keppel Corporation’s stake in M1, Singapore’s telecom operator after a regulatory inquiry found Simba Telecom may have improperly used radio frequency bands.
Key Highlights
- Tuas cancelled its $1.1 billion M1 acquisition deal.
- Singapore regulator suspended review of the deal
- A drop of nearly 10 per cent in Tuas shares on Friday
- Simba Telecom is under investigation for spectrum usage
- Keppel said the cancellation will not immediately impact finances
Tuas Pulls Out Of Major Telecom Deal In Singapore
Tuas Ltd said on Friday it has called off a deal to purchase Singapore mobile operator M1 from Keppel, through its Simba Telecom unit. The price of the agreement was S$1.43 billion, or roughly US$1.12 billion. Tuas shares slumped almost 10 per cent to A$2.08 in early Sydney trading on Thursday, while the broader S&P/ASX 200 Index was up.
Collapse of Deal Triggered by Singapore Investigation
The decision followed earlier this week when Singapore’s telecom regulator suspended its review of the deal. The Infocomm Media Development Authority said it had detected indications that Simba Telecom may have been allocating radio frequency bands not assigned to the firm for mobile services.
Tuas stated Simba continues to cooperate with authorities over potential violations of the Telecommunications Act and licence conditions. The investigation has considerably dented investor confidence, with Tuas shares plummeting by more than 60% earlier this week after the regulator's statement was reported publicly.
Keppel Says There Will Not be Any Immediate Impact on Financials from the Cancellations
Keppel said it would not incur any immediate financial impact from the failed transaction after confirming the cancellation of the deal. Keppel sold its 83.9%-stake in M1 last year but held on to its non-telecom assets, a transaction which is expected to net about S$1 billion for the company.
Keppel CEO Loh Chin Hua had said earlier that the transaction, if completed, could have funded a special payout to shareholders. Analysts believe the collapsed deal now casts new doubt over Simba Telecom’s regulatory status, and its Singapore expansion plans for Tuas.
FAQs
- Why did Tuas cancel the M1 deal?
The Singapore telecom investigation, which then led to the cancellation of the deal involving Simba Telecom.
- What was the price of the acquisition?
It valued the transaction at approximately US$1.12 billion.
- What is Singapore’s regulator investigating?
Authorities are looking to see if Simba used radio frequency bands not assigned.
- How did Tuas’ shares react?
The company’s stock crumbled nearly 10 per cent on Friday.
- Will the cancellation come at a cost to Keppel?
Keppel expects the financial impact of this is negligible in the near term.
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