The appetite of private equity for telecommunications infrastructure continues unabated, regardless of the prevailing economic conditions. The US-based investment fund, KKR, has recently exhibited this trend by acquiring a segment of Singtel’s data centre business.
KKR has made a commitment to pay S$1.1 billion ($800 million) for a 20% interest, thereby valuing the Singtel Digital InfraCoat at S$5.5 billion in total. Singtel anticipates using this investment to bolster its regional expansion.
Singtel provides a range of services including colocation, connectivity and value-added services (VaS), from its seven data centres based in Singapore and Hong Kong. An additional network of partners operates from 50 facilities, expanding Singtel’s footprint to the US, UK and throughout Asia.
Recently, Singtel commenced the construction of DC Tuas. This new data centre which, upon completion in 2025, will become Singapore’s most expansive, with a dedicated cable landing station and almost doubling Singtel’s domestic data centre capacity.
Singtel’s CFO, Arthur Lang, expressed excitement about this collaboration with KKR, stating, “The data centre industry is growing at an accelerated pace given the unprecedented industry trends we are witnessing. KKR is a highly credible partner in the data centre space and we look forward to our strategic partnership in scaling up the platform”.
Furthermore, data reveals robust growth in global enterprise spending on cloud infrastructure services to the tune of $65 billion in Q2, a noteworthy increase of $10 billion compared to 2019. KKR, among other telcos, hyperscalers and investors, is keen to leverage this upward trend and has undertaken various proactive steps.
This move by KKR and Singtel is in a similar vein to other transactions in the industry, and with several key players vying for a greater piece of the pie, KKR seems to have made a reasonable investment.
With a view towards expansion, Singtel is keen to tap into growth opportunities for InfraCo in regions such as Indonesia, Malaysia, and Thailand as well as within its home market. In response to KKR’s investment, Singtel Digital InfraCo’s CEO, Bill Chang, said it reflected the firm’s faith in their “quality portfolio of data centres.” He expressed his belief that Singtel’s competence in running, building, and designing data centres, paired with KKR’s impressive track record in digital infrastructure assets, would make for a dynamic partnership.