KEPPEL has been granted a licence by the US for a subsea cable system connecting Singapore to the US West Coast, said the firm on Friday (Jan 24).
This licence must be obtained to land a submarine cable that connects the US to any foreign country.
Spanning over 20,000 km, the Bifrost Cable System – which Keppel is jointly developing with Edge Cable Holdings USA and Telekomunikasi Indonesia International – is the world’s first subsea cable system directly connecting Singapore to the west coast of North America via Indonesia through the Java Sea and Celebes Sea.
“As the first subsea cable system linking Southeast Asia to the United States to be approved in the past eight years, Bifrost will significantly enhance Singapore’s strategic position as Asia’s leading digital hub as well as support the region’s fast-growing digital economy,” said Keppel in a statement.
The asset manager and operator said that Bifrost commenced system commissioning and acceptance testing on Jan 21. It is expected to be ready for commercial service in the second half of this year.
Its cable landing station in Singapore will be located at Keppel DC Reit’s SGP 5 data centre in Jurong.
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Keppel embarked on this project with its joint partners in March 2021 and was assigned five out of 12 fibre pairs, with its share of cost being US$350 million.
When Bifrost is completed in H2 2025, Keppel will continue to operate and maintain its five fibre pairs over 25 years, enabling it to “derive a stream of long-term recurring income”.
The five fibre pairs are jointly owned by Keppel and its private fund co-investors through a 40:60 joint venture.
Of the five fibre pairs, two have been committed to customers through an indefeasible right of use (IRU) for 25 years, while IRUs for the remaining three pairs “are currently being negotiated with potential customers”.
Loh Chin Hua, chief executive of Keppel, said: “We have received strong customer interest in our three uncommitted fibre pairs, whose prices have risen significantly as Bifrost approaches service readiness.”
He added that the expected internal rate of return for Keppel’s investment has risen to more than 30 per cent per annum.
Shares of Keppel were trading 0.8 per cent or S$0.05 higher at S$6.75 as at 10.21 am on Friday.
