Singtel to sell 20% stake in regional data centre business valued at $5.5 bil

Singtel Telecommunications (Singtel) Z74 2.07% has announced that it will sell a 20% stake of its regional data centre business to global investment firm KKR. The cash commitment on the part of KKR will total up to $1.1 billion, consequently valuing Singtel’s regional data centre business at $5.5 billion. This figure is around 60% higher than the $3.4 billion estimate by DBS Group Research.

The new venture between KKR and Singtel will also allow KKR to increase its stake to 25% of the regional data centre business by 2027 at the pre-agreed valuation.

This investment is part of KKR’s Asia infrastructure strategy and will be used to fund the expansion of Singtel’s regional data centre business in areas across Asean, including Singapore, Indonesia and Thailand. While Singtel is already looking to explore possibilities in markets such as Malaysia, these newly acquired funds will greatly aid the effort.

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As one of the largest data centre operators in Singapore, Singtel is well-positioned to leverage the new-found investment and KKR’s expertise investing in data centres and telecommunication infrastructure globally. In existing capacity, the telco already operates 62MW of data centre in Singapore alone and has engineering teams in place to oversee the construction of new centres in Batam and Bangkok.

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When these new locations become operational in 2025, Singtel’s data centre portfolio will bring the total combined capacity to over 155MW, with room for scaling up to over 200MW.

Bill Chang, CEO of the newly formed Digital InfraCo unit at Singtel, noted that KKR’s investment “underscores the quality of our data centre portfolio and confidence in our plans to scale the business by capitalising on the digitalisation and rapid AI adoption that is transforming this region.”

Meanwhile, Arthur Lang, Singtel’s group CFO, added that this investment “crystallises the latent value of our data centre assets” and “illuminates value” for their shareholders.

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David Luboff, partner and head of Asia Pacific Infrastructure at KKR, noted that “robust digital infrastructure, including high-quality data centres, will play a crucial role in enabling Southeast Asia’s flourishing digital economy, and Singapore is well-placed to serve as a central hub for the region.”

This move has also come at a time where the data centre market in Southeast Asia is expected to grow by 17% over the next five years, with nano US$9-13 billion investments projected to flow into the region alone.

The transaction is expected to be closed by the fourth quarter of 2023.