Keppel DC Reit, M1 to create entity to improve network assets.

The special purpose vehicle will own and operate M1's current mobile, fixed and fibre assets.

Keppel DC Reit and Keppel Corporation subsidiary M1 Limited has entered into a non-binding term sheet to improve the latter's network assets.

In a bourse disclosure, the companies announced that they had agreed to establish a special purpose vehicle (SPV) to own and operate M1's current mobile, fixed and fibre assets.

"The SPV will own the network assets that underpin M1’s business offerings.We believe this adds to the growth and cashflow stability for Keppel DC REIT. It also allows us to gain a foothold in Singapore’s connectivity landscape, which we can leverage when seeking further opportunities for real estate and assets that support the digital economy," said Keppel DC Reit CEO Anthea Lee.

M1 would in turn will continue to operate and maintain the network assets, and continue its transformation into Singapore's first digital network operator.

An external financing will fund the consideration by $493m, with an additional investment of $87m from Keppel DC Reit, in return for a combination of debt securities and preference shares to be issued by the SPV.

Both companies will be equally represented on the board of the SPV despite M1 retaining 100% of the shares.

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