Singapore Telecommunications (Singtel) has announced that it is currently engaged in "ongoing discussions" as part of a consortium concerning ST Telemedia's Global Data Centres.
The statement, released on Nov 7, follows a report by Reuters indicating that the telecommunications company and investment firm KKR & Co are aiming to acquire the Singapore data centre in a deal exceeding $5 billion.
"There is no certainty that these discussions will result in any definitive or binding agreements. Singtel will provide an update if there are any significant developments that necessitate disclosure in compliance with our obligations under the Singapore Securities Exchange's Listing Manual," stated Singtel.
According to DBS Group Research's note on Nov 7, if this transaction proceeds, it will be a follow-up deal as Singtel had already invested $400 million in STT GDC in June 2024 to obtain its current 4% stake, while KKR acquired a 14% stake.
The valuation remains undisclosed at this time; however, in September 2023, KKR paid a 32x trailing EV/EBITDA for Singtel's Nxera to acquire a 20% stake.
"We believe the strategy involves leveraging STT GDC's vast scale and Singtel's AI expertise while KKR addresses the power shortage issues," commented DBS.
ST GDC operates approximately 100 data centres across 11 markets, including Singapore, India, and Japan, as well as in Europe through its VIRTUS brand in the UK, Germany, and Italy, with a total IT load of around 2GW.
In contrast, Singtel's capacity is projected to reach around 155MW by the end of 2025. Notably, Singtel has an advantage in AI DC with its pioneering liquid-cooled high-power density data centre in Jurong, which is expected to command a 50-100% premium rental per MW and successfully runs Nvidia GB200 chips.
"We speculate that KKR might be leading the acquisition and attempting to unite renewable electricity providers with key data centre operators, given that power is a primary constraint for data centre growth," added DBS, maintaining its "buy" rating and a target price of $5.04.
As of 9:53 am, shares in Singtel were trading 19 cents higher, up 4.22% at $4.69.
