The proposed sale of M1’s consumer telecom operations to Simba Telecom materially increases the likelihood of renewed shareholder distributions, including the possibility of special dividends, because of how Keppel treats proceed from large monetisation events and how those events affect reported profit, distributable reserves and capital allocation choices.
Specifically, Keppel (SGX:BN4) will sell its 83.9% effective stake in M1’s telco operations for an enterprise value of S$1.43 billion, receiving S$1.0 billion in cash. Keppel will retain M1’s fast-growing ICT businesses, notably data centres and subsea cables, and expects to complete the sale “over the next few months”, subject to IMDA regulatory approval. Management has signaled the strategic intent: the sale is part of Keppel’s asset-light strategy designed to focus capital and operating resources on higher-return, recurring-income assets.
Special dividends are possible
This provides an opportunity for special dividends. Keppel does not have a rigid dividend policy but has a historical practice of distributing about 50–60% of annual net profit to shareholders. Large, one-off gains from asset disposals inflate reported net profit and often generate cash proceeds; both effects expand the pool of capital available for ordinary dividends and for special distributions (including in-specie shares or other non-cash distributions).
A direct precedent is the Keppel O&M disposal to Sembcorp Marine (now Seatrium). That transaction delivered a S$3.4 billion one-off gain, resulted in Keppel receiving 36.8 billion Sembmarine shares (an implied value of ~S$4.5 billion) and led Keppel to distribute 49% of those shares in-specie to shareholders – roughly 19.1 Sembmarine shares for every Keppel share held, an implied distribution value of ~S$4.1 billion. In FY2023 Keppel distributed in-specie Seatrium shares (equivalent to 219.0 cents per share) and Keppel REIT units (equivalent to 16.7 cents per share), concrete examples of how asset monetisation has been translated into shareholder pay-outs.
Applying that template to M1: the sale crystallises value in a regulated, consumer telco business (EV S$1.43bn; cash S$1.0bn), reduces Keppel’s exposure to a lower-margin line, and preserves the ICT assets that drive recurring earnings (M1’s retained operations recorded S$806.1m revenue and S$195.4m EBITDA in the year ending April). Even accounting for management’s expected one-off accounting loss of S$222m, the net effect is to release capital and to improve the quality of the group’s recurring earnings.
CEO Loh Chin Hua has framed asset monetisation as a tool “to free up funds for growth, debt reduction and rewarding shareholders.” Keppel’s FY2024 payout ratio was 67% versus 15% in 2023, demonstrating management’s willingness to sustain elevated distributions when balance-sheet events and recurring profits permit. Taken together, the M1 sale therefore raises the probability of either a higher ordinary dividend or a further special distribution (including in-specie forms), because it mirrors the mechanics and outcomes of the O&M disposal.
Keppel’s business model
Beyond the dividends, the M1 and O&M transactions are structural steps in Keppel’s deliberate pivot to an asset-light model. The group has been stripping out capital-intensive, cyclical or regulated consumer businesses and reallocating capital into three core segments – Infrastructure, Real Estate (re-scoped as Real Estate-as-a-Service), and Connectivity, delivered through three integrated platforms: Fund Management, Investment, and Operations. The technical mechanics are explicit:
- Fund Management platform: raises third-party capital and manages private funds and listed vehicles (Keppel’s FUM rose from S$37bn in 2020 to S$88bn by end-2024, a 2.4x increase), with targets of S$100bn by end-2026 and S$200bn by 2030.
- Investment platform: co-invests and deploys capital across the capital stack into infrastructure, connectivity and SUR projects, then recycles assets into funds or listed trusts.
- Operating platform: develops, operates and contracts assets (power plants, desalination, district cooling, data-centre operations, subsea cable O&M) to deliver long-term contracted cash flows and create investable assets for funds.
These platforms enable a repeatable develop–operate–fund–recycle loop. Technical evidence of the shift includes Keppel’s total assets falling 14% to US$27.7bn by end-2024 while recurring income rose to 72% of net profit from continuing operations in 2024.
- Infrastructure contributed US$673m in profit in 2024 and Keppel targets doubling power capacity from 1.5GW to 3.0GW by 2030, deploying power generation, low-carbon electricity importation, and EaaS offerings (district cooling, smart energy management, distributed solar PV, EV charging).
- Connectivity expanded gross data-centre power capacity to 650MW by end-2024, with plans to approach 1.2GW in the coming years and major projects such as the Bifrost subsea cable system.
- In Real Estate, Keppel has materially reduced its traditional development landbank from US$3.1bn (2017) to ~US$1.1bn (end-2024) and is implementing SUR projects worth US$3.3bn across six projects (Singapore, Ho Chi Minh City, Seoul, Pune, Chennai).
Keppel is different
However, despite these maneuvers, we would highlight that Keppel is different from a traditional financial institution and real estate manager.
- Not a traditional financial institution: Keppel does not primarily earn net interest margin from lending or accept retail deposits. Its model raises third-party capital (private funds, listed trusts) and earns management fees, performance fees and operating cash flows (power sales, O&M fees, data-centre capacity sales). Regulatory, capital and liquidity profiles differ materially from banks: Keppel behaves like an alternative asset manager/operator (akin to Blackstone/Brookfield/Macquarie) with operational ownership in assets that produce cash yields and fee income, rather than a deposit-taking or loan-making entity.
- Not a pure real-estate manager like Capitaland: Capitaland’s universe is property and lodging: fee income from REITs and private property funds, lodging management (Ascott), and commercial property management. CLI reported S$47bn private funds FUM (FY2024) and S$136bn AUM overall, and its fee streams are overwhelmingly property-centric. Keppel’s asset mix is different and more industrial: energy & environmental infrastructure (power, waste-to-energy, water treatment), digital infrastructure (data centres, subsea cables), and urban solutions (SUR, senior living). Keppel builds and operates infrastructure (not just assets for leasing). Keppel’s revenue therefore includes power & utility sales, long-term O&M contracts and data-centre capacity sales, distinct technical revenue drivers compared with pure property rental/management fees.
Asset light business model is the future
By and large, the M1 sale is not a stand-alone matter of simplifying the portfolio; it is a technical and repeatable lever in Keppel’s asset-light playbook, a monetisation that simultaneously improves reported earnings metrics, increases distributable capital, and accelerates redeployment into fundable infrastructure and connectivity assets. The M1 transaction materially increases the plausibility that Keppel will return capital to shareholders via higher dividends or another special distribution while continuing to re-shape itself into an asset-light, operating-centred alternatives manager rather than a bank or a pure property manager.
Many REIT operators in Singapore are shifting to an asset light model. Singapore’s real estate managers have generally shown a track record in efficiently optimising asset operations. This helps them in raising funds and shifting to an asset manager. Furthermore, Singapore’s real estate assets are maturing. All funds have a minimum IRR to achieve, when the asset matures with slower growth, IRR will decrease year on year. This forces companies to recycle cash and look for new investments. With this structural reason, the trend is pointing towards an asset light model.
P.S. if you’re interested in REITs and want to build a dividend portfolio, join Chris at his next live webinar to learn from someone who has retired doing just that.
