The Singapore-based telecommunications company Singtel has entered into a deal with the global investment firm KKR. Under this agreement, KKR will acquire a 20 percent stake in Singtel's regional data centre business for up to SGD 1.1 billion (approximately USD 800 million). This investment values Singtel's regional data centre business at SGD 5.5 billion, with KKR having the option to increase its stake to 25 percent by 2027 at a predetermined valuation.
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Purpose of the Investment
According to the official statement, this marks the first collaboration between Singtel and KKR. KKR's investment in Singtel's data centre business aims to accelerate the expansion of regional data centre operations across ASEAN markets, including Singapore, Indonesia, and Thailand. The funds will also be used to explore opportunities in other markets, such as Malaysia.
Strategic Importance
Singtel's data centre business is part of its Digital InfraCo unit, established in June 2023, as reported by TelecomTalk. Singtel has been expanding its data centre operations, both in Singapore and through partnerships in other Southeast Asian countries, said the statement. This investment will help strengthen Singtel's position in the rapidly growing data centre industry.
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Data Centre Capacity Growth
"In addition to 62 MW of existing capacity in Singapore, Singtel is building a new 58 MW DC Tuas in Singapore and has also partnered Telkom and Medco Power in Indonesia and GULF and AIS in Thailand to develop data centres in Batam and Bangkok respectively, noted the statement.
Singtel's data centre portfolio will deliver a combined capacity of over 155 MW once three new projects become operational in 2025, with room for further expansion to more than 200 MW.
Market Growth
The official statement noted that Southeast Asia's data centre market is expected to grow at a rate of 17 percent over the next five years, outpacing the global average of 12 percent. This growth is driven by increased data consumption, cloud adoption by enterprises, and the rapid rise of AI in the region.
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KKR's Infrastructure Strategy
KKR said it is making this investment as part of its Asia infrastructure strategy. This transaction marks KKR's latest investment in Southeast Asia Infrastructure and data centre infrastructure globally.
The firm has been actively investing in Southeast Asian infrastructure, including digital infrastructure platforms and renewable energy projects. Globally, KKR said its investments in data centre infrastructure have included CyrusOne, Global Technical Realty, and CoolIT Systems.
Completion Timeline
The transaction is expected to be completed by the fourth quarter of 2023, pending regulatory approvals and customary closing conditions.
