Singapore Telecommunications (Singtel), Southeast Asia’s largest telecom operator, has reached an agreement to sell a substantial 20% stake in its regional data center business to the renowned U.S. private equity firm KKR for a staggering sum of S$1.1 billion ($807 million).
KKR’s Monumental Investment in Southeast Asian Infrastructure
This monumental deal places the enterprise value of Singtel’s data center unit at an impressive S$5.5 billion, as revealed in a joint statement made on Monday. Notably, this marks KKR’s most substantial investment in Southeast Asian infrastructure and data center operations on a global scale. Furthermore, KKR retains the option to increase its stake to 25% by 2027, underscoring its confidence in the region’s growth potential.
Fueling Southeast Asian Data Center Expansion
Singtel has articulated plans to utilize the proceeds from this significant transaction to fuel the expansion of its regional data center business throughout Southeast Asia. These expansion efforts are expected to encompass key markets such as Singapore, Indonesia, and Thailand, with a strategic eye on venturing into emerging markets like Malaysia. The closure of this transformative deal is anticipated to occur by the fourth quarter.
Unlocking the Value of Data Center Assets
Arthur Lang, the Chief Financial Officer of Singtel, expressed the significance of KKR’s investment, stating, “The investment by KKR crystallizes the latent value of our data center assets and we hope this illuminates value for our shareholders in the coming months. With more than S$6 billion being unlocked since we embarked on our strategic reset two years ago, we continue to focus on unlocking value for our shareholders.”
Southeast Asia’s Infrastructure Investment Hotspot
Southeast Asia has emerged as a hotbed for infrastructure investments, driven by the region’s escalating demand for private capital to develop and upgrade telecommunications, transportation, utilities, and other critical infrastructure components. KKR’s substantial presence in Southeast Asia already includes investments in Pinnacle Towers, a leading telecom tower company in the Philippines, and Aster Renewable Energy, a platform operating solar, wind, and energy storage projects across the region.
Anticipated Growth in the Southeast Asian Data Center Market
Singtel and KKR jointly projected that the Southeast Asian data center market is poised for remarkable growth, anticipating a 17% increase over the next five years. This growth trajectory is expected to draw in investments ranging from $9 billion to $13 billion during this period.
Singtel’s Capital-Raising Strategy
Singtel, which serves more than 770 million mobile customers in 21 countries, including Singapore, Australia, India, Indonesia, the Philippines, Thailand, and several African nations, has been actively seeking capital through divestments to bolster the launch of its groundbreaking 5G network. In a similar vein, in September of the previous year, Singtel successfully sold a 3.3% stake in the Indian mobile carrier Airtel to Bharti Telecom, its joint venture partner with billionaire Sunil Mittal’s Bharti Enterprises, for an impressive sum of S$2.25 billion.
