Singtel divests 20% of data center business to KKR for $806m

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Asian telco major Singtel has agreed to sell 20% of its regional data center business to global investment firm KKR for a commitment of S$1.1 billion (around US$806 million).

The deal values Singtel’s regional data center business at around US$4 billion, according to a joint release. KKR could also increase its stake to 25% by 2027 at the same valuation. The deal is expected to be done by the fourth quarter of 2023, subject to regulatory approvals and customary closing conditions.

The agreement is the first between Singtel and KKR, allowing the telco to access KKR’s expertise to help it expand its regional data center business across ASEAN markets, such as Singapore, Indonesia, and Thailand. Singtel is also eyeing other countries like Malaysia.

Citing data from Kearney, Singtel and KKR said Southeast Asia’s data center market is expected to grow by 17% over the next five years compared to 12% for the rest of the world. About US$9 billion to US$13 billion in investments is also anticipated to come into segment in the region.

Data center capacity is expected to increase at a rate of 19% from 2021 to 2026, while demand is projected to be higher than supply due to increased data usage, enterprises moving to the cloud, and the fast growth of AI in the region.

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Singtel’s regional data center business is part of its Digital InfraCo unit, which was formed in June.

Its data center portfolio will have a total capacity of over 155 megawatts once its three new projects in Singapore, Indonesia, and Thailand are ready in 2025. According to data from CBRE, Southeast Asia’s total data center capacity stood at 1,100 megawatts as of April last year.

Currency converted from Singapore dollar to US dollar: US$1 = S$1.36.