Keppel DC REIT Divests S\$79M Telecom Assets to Refocus on Hyperscale Data Centres: What Retail Investors Must Know!

Key Points from the Announcement

• Keppel DC REIT to divest its entire interests in NetCo Bonds and NetCo Preference Shares for approximately S\$79.2 million.
• Sale is in line with Keppel DC REIT’s strategy to focus on data centre assets, particularly in the high-growth hyperscale segment.
• Proceeds from the sale are earmarked for future acquisitions, asset enhancement, and debt reduction to create headroom for further growth.
• The deal is structured as a sale to an unrelated third-party holding company, subject to regulatory approvals.
• No material impact expected on net asset value or distribution per unit for FY2025, according to management.

In-Depth Details of the Transaction

Keppel DC REIT Management Pte. Ltd., acting as manager of Keppel DC REIT, announced the sale of its entire stake in both the NetCo Bonds and NetCo Preference Shares issued by M1 Network Private Limited (“NetCo”). The transaction was formalized on 11 August 2025 with a private limited company incorporated in Singapore.

The NetCo Bonds were originally subscribed for S\$88.7 million in December 2021, with Keppel DC REIT receiving S\$11 million per year (principal plus interest) over 15 years. Alongside the bonds, Keppel DC REIT also subscribed for S\$1 million in NetCo Preference Shares, which granted them 50% representation on NetCo’s board – a significant governance right.

NetCo itself is the owner of mobile, fixed, and fibre assets of M1, operating under a network services agreement with M1 and its virtual network operators. The assets give NetCo strategic importance in Singapore’s telecom infrastructure.

Under the terms of the sale, Keppel DC REIT will sell 100% of its NetCo Bonds and Preference Shares for the aggregate principal outstanding (which declines year by year), plus accrued interest. If the deal had closed on the date of the announcement, the price would be around S\$79.2 million, broken down as follows:

• S\$77.2 million in principal amount of NetCo Bonds
• S\$1.0 million in accrued interest on NetCo Bonds
• S\$1.0 million in principal amount of NetCo Preference Shares

The transaction is subject to regulatory approval, including clearance from the Infocomm Media Development Authority.

Why Is Keppel DC REIT Selling These Telecom Assets?

The manager has clearly signalled a strategic pivot: the sale is designed to refocus the REIT’s portfolio on data centre assets, especially targeting the hyperscale segment, which is currently experiencing rapid growth and higher returns. This is part of a broader portfolio rebalancing effort to support long-term expansion and capital deployment into higher-growth opportunities.

Importantly, the sales proceeds will be used for:

• Future acquisitions in the data centre space
• Asset enhancement initiatives
• Reducing borrowings and creating additional debt headroom for future investments

Potential Impact on Shareholders and Share Price

For retail investors, this announcement is potentially price-sensitive for several reasons:

• Strategic Pivot: The sale marks a decisive move away from telecom-related investments, signalling future capital will be channelled into data centre assets, which are perceived as higher-yield and lower-risk in the current tech-driven environment.
• Liquidity and Growth: By freeing up S\$79.2 million in capital, Keppel DC REIT is positioning itself to capture opportunities in the hyperscale data centre market, which could drive future distributions and capital appreciation.
• Portfolio Rebalancing: The disposal reduces exposure to telecom infrastructure, potentially lowering operational risk and volatility – a positive for income-focused REIT investors.
• No Material Financial Impact for FY2025: According to the REIT’s management, the sale is not expected to materially affect net asset value or distribution per unit for the year ending December 2025, so near-term income stability is maintained.

However, investors should monitor how quickly and effectively management deploys the sale proceeds into higher-yielding assets and whether the pivot to hyperscale data centres results in superior long-term returns.

Additionally, as the transaction is subject to regulatory approval, there is a risk of delay or non-completion, which could temporarily affect sentiment or share price volatility.

Other Noteworthy Details

• This is classified as a “non-discloseable transaction” under SGX rules, meaning it does not meet thresholds for mandatory shareholder approval or detailed disclosure.
• Investors are cautioned against relying solely on past performance, and should be aware that REIT units are subject to market risk, with no guarantee of principal or income.

Conclusion

Keppel DC REIT’s disposal of its S\$79 million stake in telecom assets represents a major strategic shift towards hyperscale data centres. While immediate financial impact is neutral, the redeployment of proceeds could drive future growth and value creation. Retail investors should watch for subsequent acquisitions and management’s execution on its hyperscale data centre strategy.

Disclaimer

This article is for informational purposes only and does not constitute investment advice. Investors should conduct their own due diligence and consult with licensed financial advisors before making any investment decisions. The author is not responsible for any investment actions taken based on this article.

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