Singapore Telecommunications (Singtel) said it is having “ongoing discussions”, as part of a consortium, in relation to ST Telemedia's Global Data Centres.
The statement, issued on Nov 7, came after Reuters reported that the telco and investment firm KKR & Co were seeking to own the Singapore data centre in a deal valued at over $5 billion.
“There is no certainty that such discussions will lead to any definitive or binding agreement. Singtel will make an announcement if and when there are any material developments that warrant disclosure in accordance with our obligations under the Listing Manual of the Singapore Securities Exchange Trading Limited,” said the telco.
In its Nov 7 note, DBS Group Research points out that if this transaction materialises, it is a follow-up deal as Singtel had already invested $400 million in STT GDC to acquire its current stake of around 4% in June 2024 while KKR acquired 14%.
The valuation is not known at this point in time but previously, KKR paid a 32x trailing EV/EBITDA for Singtel’s Nxera to acquire a 20% stake in September 2023.
"We think the idea is to leverage STT GDC’s huge scale and Singtel’s expertise in the AI space with KKR resolving the power shortage issues," says DBS.
See also: KKR and Singtel to buy over ST Telemedia's Global Data Centres; Singtel shares up nearly 5%
For context, ST GDC operates around 100 data centres across 11 markets including Singapore, India and Japan, as well as Europe via its VIRTUS brand in the UK Germany and Italy, with a total IT load of around 2GW.
In contrast, Singtel’s will only reach around 155MW by the end of 2025. However, Singtel has a leg up in AI DC with its Singapore’s first liquid cooled high-power density data centre in Jurong, which is estimated to command 50-100% premium rental per MW and has successfully run Nvidia GB200 chips.
"We speculate that KKR could be leading the acquisition and is trying to bring together renewable electricity power players and key data centre players as power is a key constraint for data centre growth," says DBS, which has kept its "buy" call and $5.04 target price.
As at 9.53am, shares in Singtel are trading 19 cents higher or 4.22% up at $4.69.
