Under the agreement, Nokia will supply and install a full range of telecommunications equipment including mobile switching centers, home location registers, transit switching layer, base stations and base station controllers.
The deal will also provide M1 with Nokia's UltraSite base station solution, which caters to higher voice and data traffic, the Singapore mobile operator said in a statement. The UltraSite will support GSM, GPRS, EDGE and WCDMA for 3G technologies.
When contacted, M1 spokesperson Chua Swee Kiat said this upgrade is expected to be completed by the end of the next quarter.
According to Chua, M1 has approximately 800,000 GSM subscribers to date. However, he declined to reveal how many subscribers the expanded network can support.
"This latest expansion will lay the foundation for the introduction and launch of the next generation of rich multimedia services," Nokia Networks Singapore general manager James Lin said in the statement.
Last September, M1 was in a similar deal with Nokia, where it also spent US$40 million.
Besides M1, the telco infrastructure provider had also recently closed deals with Cable & Wireless Optus of Australia, and China-based Heilongjiang Mobile Communications, according to Nokia.
In early April, Keppel T&T, which owns 35 percent of M1, said that the latter's shareholders were looking to dispose of their stakes in the telco.
The other M1 shareholders are Singapore Press Holdings, which owns a 35 percent stake, and Hong Kong-based Great Eastern Pte Ltd, which holds 30 percent.
Last week, Keppel Corp executive chairman Lim Chee Onn said that the deadline for interested parties to submit firm bids for M1 was May 28.
When asked if M1 will honor its US$40 million contract with Nokia regardless of whether the buyout goes through or not, Chua said: "Business is as usual." He did not comment further.
"We don't believe the acquisition will affect this contract or our relationship with M1," said a Nokia Asia Pacific spokesperson.