Singtel completes back-to-back data center deals

Singtel on Tuesday announced two data center deals geared toward strengthening its market position in southeast Asia.

The Singaporean telco operator in a consortium with investment firm KKR has signed a definitive agreement to invest 1.75 billion Singapore dollars (US$1.3) billion for a minority stake in Asian digital infrastructure company ST Telemedia Global Data Centres (STT GDC). The announcement confirmed earlier reports that Singtel and KKR were frontrunners for this highly coveted deal.

In another data center transaction, Singtel also confirmed that it has entered a joint venture with Telekom Malaysia (TM) to develop next-generation data centers in Malaysia. This latest partnership with TM is made through Nxera, the regional data center arm of Singtel's Digital InfraCo unit.

Largest digital infrastructure in southeast Asia

The KKR-Singtel consortium's initial S$1.75 billion investment into STT GDC will be made via redeemable preference shares (RPS) and warrants. Upon exercise of the warrants in full, the consortium will invest an additional S$1.24 billion ($920 million).

The three companies claim the transaction is the largest digital infrastructure investment in southeast Asia to date in 2024.

Following the investment, the consortium gets a minority stake of 18.3% in STT GDC – with KKR owning 14.1% in STT GDC and Singtel holding 4.2%. ST Telemedia continues to be the majority shareholder of STT GDC.

Related:Singtel and KKR lead would-be bidders for $1B data center deal

The KKR-Singtel consortium was selected following an independent competitive process, reportedly vying against other private equity firms including private including Apollo Global Management, Blackstone and Stonepeak Partners.

The closing of the transaction is subject to the satisfaction of certain conditions precedent including regulatory approvals.

Proceeds of the investment will be used to fund STT GDC's continuing international expansion and growth plans through organic and inorganic strategies.

"We are thrilled to welcome KKR and Singtel, two blue-chip investors in the digital infrastructure space into the STT GDC group. With the industry experiencing unprecedented cloud and AI-led growth, this strategic partnership with KKR and Singtel will be a significant catalyst for STT GDC's next chapter of growth as a leader in the digital infrastructure industry,'' Bruno Lopez, president and group CEO of STT GDC, said in a statement.

Singapore-based STT GDC has more than 95 data centers across 11 geographies and points of presence in over 20 major business markets. It provides critical services including colocation, connectivity and support services. Today, its data center portfolio has a total combined capacity of more than 1.7GW of IT load.

Related:Johor in Malaysia consolidates its place as a data center hotspot

Teaming up with TM to build data centers in Malaysia

Meanwhile, Singtel and TM will kick off their new joint venture with the construction of a hyper-connected AI-ready data center campus in Johor.

The data center campus will be located in Iskandar Puteri, just 16 kilometers from Singapore. The initial phase of the new facility is planned for 64MW and can be scaled up to 200MW in response to market demand.

Singtel said the high-power density campus will be able to host large computing and AI capabilities such as requirements by cloud hyperscalers and GPU-as-a-Service providers. It also features advanced technologies such as liquid cooling to support high-power density workloads and operations efficiently.

With its close proximity to subsea cable links between Singapore and Malaysia, the data center will be well-placed to support the increasing demand from both countries' digitalization and development initiatives.

"The development of this first data center campus in Johor, which can be expanded in phases, demonstrates our ability to scale quickly in markets that are important to our customers. With our joint industry expertise and strong track record, we will build and operate one of the most efficient, sustainable and connectivity-rich data centers in Malaysia," Bill Chang, CEO of Nxera and Singtel's Digital InfraCo unit, said in a press release.

He added that Singtel and TM will be expanding the submarine cable connectivity between Singapore and Johor to enhance digital connectivity. The joint venture will also partner with institutes of higher learning in Malaysia to nurture talent needed by the industry.

"Our strategy of developing data center sites with close proximity to our operations in Singapore allows us to capture spillover demand from our customers and help them scale their business with confidence," Chang said.

Nxera's total pipeline capacity is set to increase from its current operational capacity of 62MW in Singapore to more than 200MW in the region in the next three years.

Nxera is developing three new AI-ready data centers in Southeast Asia in addition to 62MW of existing capacity in Singapore. This includes a new 58MW data center in Tuas, Singapore and data centers with partners in Indonesia and Thailand.

The data centers will be served by Digital InfraCo's comprehensive network of subsea fiber-optic cables which provide customers with the best country-to-country connectivity in the Asia Pacific region.

Elevating the Asean as a preferred digital hub

TM Group CEO Amar Huzaimi Md Deris, TM's group chief executive officer, noted that the joint venture with Singtel will elevate the Asean as the preferred digital hub.

"TM brings the largest domestic network infrastructure, extensive international subsea cable systems and the largest interconnected DC in Malaysia, a solid backbone for this project. This will serve as a catalyst for high performance computing and lay a solid foundation for the future advancement of cloud and AI applications," he said in a press release.

TM currently operates seven data centers across Malaysia with two core data centers located in Klang Valley and Johor.

The company's entry into the Asia Link Cable Systems (ALC) partnership facilitates the laying of a submarine cable system spanning approximately 7,200 kilometers, with an initial design capacity of 24 Tbit/s.

Coupled with the establishment of an international cable landing station at TM Exchange Kuala Sedili, Johor, TM said these vital infrastructure enhancements will hasten the growth of the data center industry in the southern Malaysian state.