Keppel's US Approval: A Game Changer for Asia's Digital Hub

Keppel Ltd. (Keppel), a global asset manager and operator, has received a significant boost to its strategic position in the digital infrastructure landscape with the United States Federal Communications Commission (USFCC) granting a subsea cable landing license for the Bifrost Cable System. This approval marks a crucial milestone for the project, paving the way for its successful deployment and enhancing Singapore's strategic position as Asia's leading digital hub.

The Bifrost Cable System, a joint venture between Keppel, Edge Cable Holdings USA, LLC (Meta), and PT Telekomunikasi Indonesia International (Telin), is the world's first subsea cable system to directly connect Singapore to the west coast of North America via Indonesia through the Java Sea and Celebes Sea. Spanning over 20,000km, the Bifrost Cable System will significantly enhance connectivity and network diversity for Keppel's customers, enabling better performance and reliability of the company's data centre offerings.

The approval of the Bifrost Cable System by the USFCC has several potential financial implications for Keppel and its private fund co-investors. With an expected Internal Rate of Return (IRR) of over 30% per annum, the project is expected to generate attractive returns for the investors involved. This high IRR is driven by strong customer interest in the three uncommitted fibre pairs, whose prices have risen significantly as Bifrost approaches service readiness. Additionally, upon completion in the second half of 2025, Keppel will continue to operate and maintain its five fibre pairs over a period of 25 years, generating a stream of long-term recurring income for the company.

The direct connection between Singapore and the west coast of North America via Indonesia, facilitated by the Bifrost Cable System, will contribute to Singapore's strategic position as Asia's leading digital hub in several ways. First, it will enhance connectivity and network diversity, enabling better communication and data exchange between businesses and consumers in the region and the rest of the world. Second, it will support the region's fast-growing digital economy by facilitating international trade, e-commerce, and data exchange. Third, it will attract global cloud players and technology leaders, further strengthening Singapore's position as a digital hub. Lastly, it will position Keppel at the forefront of the digital economy, enabling the company to provide critical digital infrastructure and services to businesses and consumers in the region.

In conclusion, the USFCC's approval of the Bifrost Cable System is a significant milestone for Keppel and a game changer for Asia's digital hub. The project's potential financial implications, enhanced connectivity, and support for the region's digital economy make it a strategic asset for Keppel and a testament to the company's strong partnership with Meta and Telin. As Keppel continues to develop and operate other subsea cables linking Southeast Asia with the rest of Asia and beyond, the Bifrost Cable System will play a crucial role in entrenching the company's position as a strategic ecosystem partner to global cloud players and technology leaders.