New Telecom and KKR Consortium Acquires 82% Stake in New Science Telecom Media Global Data Center for 6.6 Billion Yuan | Lianhe Zaobao

American investment firm KKR and a consortium formed with Singtel will acquire the remaining 82% stake in ST Telemedia Global Data Centres (STT GDC) for SGD 6.6 billion. According to a statement issued by KKR and Singtel on Wednesday (February 4) before the market opened, this price corresponds to an implied enterprise value of SGD 13.8 billion. After the transaction is completed, KKR and Singtel will hold 75% and 25% of the company, respectively. According to previous media reports, the Government of Singapore Investment Corporation (GIC) and the Abu Dhabi sovereign wealth fund Mubadala Investment Co. also support this acquisition by investing through KKR and holding a minority stake in STT GDC. STT GDC is a subsidiary of ST Telemedia, a wholly-owned company under Temasek Holdings. Data centers have attracted significant attention from investors largely due to their crucial role in the booming artificial intelligence sector. The acquisition led by KKR has been rumored multiple times before finalizing details and making a formal announcement. Headquartered in Singapore, STT GDC is one of the largest data center operators in Asia, with over 100 data centers across more than 20 major markets, including India, South Korea, Japan, and Malaysia. In addition to the Asian market, the company also has operations in overseas regions such as the UK, Italy, and Germany. Singtel Group Chief Financial Officer Lan Daoyi stated that this acquisition further enriches the company's data center asset portfolio. "The diversified geographical layout of STT GDC enhances the ability to explore new markets and positions Singtel as a more globally influential data center operator." He emphasized that Singtel will strictly control capital allocation and evaluate various capital recycling options to support growth and maintain the efficiency of its balance sheet. Ravi Lambah, Head of Strategic Planning at Temasek, noted in a statement that as a long-term shareholder of ST Telemedia, Temasek has consistently supported the management teams of the company and STT GDC, investing at various stages of its development. "This collaboration reflects Temasek's commitment to supporting businesses that create lasting value and build resilient, future-oriented infrastructure for an AI-driven world." Most Analysts Optimistic About Singtel's Future Performance Hussaini Saifee, a research analyst at Malayan Banking, told Lianhe Zaobao that given Singtel's strong balance sheet and ongoing asset divestment options, it will be able to "easily handle the transaction amount." He recommends buying Singtel. Singtel and STT GDC each have approximately 120 megawatts (including the Tuas data center) and 110 megawatts of data center capacity in Singapore. After the consortium fully acquires STT GDC, Singtel and STT GDC will together account for about 20% of Singapore's data center capacity Hosseini believes that this is a significant share, as the supply of data centers in Singapore is limited. Singtel is also building data centers in Thailand, Malaysia, and Indonesia and holds minority stakes. Most of the business is in STT GDC outside of Singapore, where data centers are already operational. However, it is still too early to say whether it and Singtel can consolidate these data center capabilities, as it involves complex equity structures and partnerships. Therefore, for markets outside of Singapore, this is essentially an acquisition deal rather than market consolidation. After foreign media reported this news on February 1, Singtel clarified on the same day that the consortium is in the "in-depth" negotiation stage to acquire STT GDC, but there is no guarantee that a deal will be reached. RHB subsequently maintained its "buy" rating for Singtel with a target price of SGD 5.20, believing that the STT GDC stake has significant synergy for Singtel. DBS Group analyst Sachin Mittal pointed out in a report last December that, apart from its core mobile business, Singtel's growth in Singapore is increasingly driven by its digital infrastructure business, Nxera. Its partnership with KKR to acquire STT GDC will significantly expand its share in a rapidly growing, higher-valued data center investment portfolio. Mittal stated that acquiring STT GDC at a reasonable price could add a high-growth affiliate company for Singtel beyond India's Bharti. This will have little impact on Singtel in the short term, but the outlook is promising in three to four years. He expects Singtel's target price to be SGD 5.71 and recommends buying. Singtel's stock price surged 4.74% on Tuesday (February 3), closing at SGD 4.86. During the trading session on Tuesday, it reached a peak increase of 5.39%, with the stock price hitting a high of SGD 4.89