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Singtel’s $807 Million Stake Sale to KKR Expands Southeast Asia Data Center Footprint

Southeast Asia’s telecom giant, Singapore Telecommunications, has inked a deal to divest a 20% stake in its regional data center operations to U.S. private equity titan KKR, for a hefty sum of S$1.1 billion ($807 million).

This transaction values Singtel’s data center unit at an impressive S$5.5 billion, as disclosed in a joint announcement on Monday. Notably, this move represents KKR’s most substantial investment in Southeast Asian infrastructure and global data center infrastructure. Additionally, KKR retains the option to boost its ownership to 25% by 2027.

Singtel plans to leverage the proceeds from this sale to fuel the expansion of its regional data center footprint across Southeast Asia, encompassing key markets like Singapore, Indonesia, and Thailand. Furthermore, it aims to venture into new territories such as Malaysia. The anticipated closure of this deal is slated for the fourth quarter.

Arthur Lang, Singtel’s CFO, expressed optimism about the transaction, 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.” He further emphasized the company’s ongoing commitment to unlocking shareholder value, with over S$6 billion already unleashed since the initiation of its strategic reset two years ago.

Southeast Asia has emerged as a focal point for infrastructure investments, driven by the region’s escalating demand for private capital to bolster telecommunications, transportation, utilities, and other critical infrastructure. Last year, KKR amassed more than $4 billion for its latest Asia infrastructure fund, surpassing the $3.9 billion raised for its inaugural Asia Pacific fund in 2021. Notable in KKR‘s Southeast Asian investment portfolio are Pinnacle Towers, a leading telecom tower entity in the Philippines, and Aster Renewable Energy, a platform spearheading solar, wind, and energy storage projects across the region.

Singtel and KKR project robust growth in the Southeast Asian data center market, estimating a staggering 17% expansion over the next five years, with anticipated investments ranging from $9 billion to $13 billion during this period.

With a customer base exceeding 770 million mobile users across 21 countries, including Singapore, Australia, India, Indonesia, the Philippines, Thailand, and Africa, Singtel has been actively seeking capital through divestments to propel its 5G network rollout. Notably, in September of last year, Singtel offloaded a 3.3% stake in Indian mobile carrier Airtel to Bharti Telecom, its joint venture with billionaire Sunil Mittal’s Bharti Enterprises, for S$2.25 billion.

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