An indefeasible right of use (IRU) agreement has been struck by Singapore-based Keppel Ltd. through its connectivity division with a top hyperscaler in the world for the last fiber pair on the Bifrost Cable System (Bifrost).
According to a statement released by Keppel on Tuesday, all five fiber pairs in the company’s Bifrost portfolio have been committed to this deal, which has an estimated total contract value of almost $1.3 billion and includes steady recurring income from cable operations and maintenance over a 25-year period.
A wide range of clients, including major telecom providers, top hyperscalers, and international tech firms, have committed to the five fiber pairs.
For Keppel and its private fund investors, the Bifrost project is anticipated to yield an internal rate of return of roughly 30%.
“The successful commercialisation of all five of Keppel’s fibre pairs on Bifrost is a strong validation of our ability to originate, develop, operate and crystalise value from proprietary digital infrastructure assets,
“It demonstrates how our integrated ecosystem creates differentiated connectivity solutions that customers value, while delivering attractive returns to our limited partners and Keppel as a co-investor, and generating long-term recurring income through both our asset management and operating platforms,” said Manjot Singh Mann, Chief Executive Officer, Connectivity of Keppel.
Additionally, he stated that the company is pursuing and assessing two new cable systems, one from Singapore to the Middle East with branches throughout South Asia and another from Singapore to Japan via the South China Sea with branches throughout ASEAN, in order to build on this track record, along with the company’s private funds and listed trusts.
“By harnessing our capabilities across digital infrastructure, including data centers and power, we are well positioned to support the next wave of artificial intelligence (AI)-driven digital growth,” he added.
The first underwater cable system in history, Bifrost connects Singapore directly to the west coast of the United States via Indonesia and the Java and Celebes Seas.
Bifrost, which spans more than 20,000 kilometers, increases the stability of this vital digital corridor by supporting AI and cloud-native applications and adding more than 240 Tbps of trans-Pacific bandwidth.
Keppel’s investment in the Bifrost fiber pairs is held through a 40-60 joint venture with its private fund co-investors in accordance with its asset-light business model.
Keppel’s capacity to create, fund, build, and run capital-intensive digital infrastructure through its integrated business strategy as a global asset manager and operator is demonstrated by the successful commercialization of Bifrost.
Keppel stated that the company is well-positioned to provide end-to-end digital infrastructure solutions that support the expansion of artificial intelligence, cloud computing, and digitalization by combining capabilities across subsea connectivity, including cable installation and maintenance, data centers, power, cooling, and water solutions.
According to the announcement, Keppel Ltd.’s net tangible asset per share and earnings per share for the current fiscal year are not anticipated to be significantly impacted by the aforementioned agreement.
