Singtel Welcomes KKR as an Investor In Its ~US$4 Billion Regional Data Center Business, Paving the Way for Greater Digital Infrastructure Support in ASEAN

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By Sarah Yong | 4Q 2023 | IN-7098

Investment firm KKR bought a 20% stake ( ~SGD1.1 billion) in Singtel’s regional data center business in September 2023. This ABI Insight discusses the implications of the recent influx of new, large (30 Megawatts (MW) > 120 MW) scale data center investments in the Southeast Asian region for both companies, as well as the wider digital infrastructure ecosystem of Southeast Asia.

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KKR Now Holds a 20% Stake in Singtel's Data Center Business


Global investment firm KKR has agreed to invest ~US$800 million (SG$1.1 billion) in Singtel’s regional data center business. Under this deal, KKR will hold a 20% stake in the business. This collaboration will give Singtel access to KKR’s expertise in data center investments and boost Singtel’s global and regional presence in the telecommunications infrastructure market. It will also serve to catalyze the expansion of Singtel into other Association of Southeast Asian Nations (ASEAN) markets, namely Indonesia, Thailand, Malaysia, and Vietnam. Likewise for KKR, this merger will provide KKR with the leverage and access to Singtel’s strong profile in the region, including Singtel’s goal of becoming Southeast Asia’s leading provider of data center services.

ASEAN's Digital Infrastructure Demand Is Picking Up


Southeast Asia is one of the fastest growing regions, with its population forecast to exceed 700 million by 2028 (International Monetary Fund). Along with this comes the increase in Internet penetration and digitalization across the region, which has been accelerated by the adoption of 5G, subsea cabling systems, and Satellite Communication (SatCom) services in the region. The growing demand for data necessitates the presence of more regional data centers. In addition, 5G technology has enabled the growth of cloud and Artificial Intelligence (AI), both of which are heavily dependent on data centers to carry out real-time capabilities across different use cases and industries. For example, there has been an uptick in prioritizing cloud-native strategies in digital infrastructure planning for large organizations like ST Engineering in Singapore.

The support from Singtel of its regional data centers identifies Singapore, Thailand, and Indonesia as dynamic economies in the Southeast Asian region. Singtel currently has 7 data centers in Singapore with a combined capacity of more than 60 Megawatts (MW), with DC Tuas (58 MW) in the pipeline as of August 2023. Regionally, in Thailand, Singtel has also invested in building a data center in collaboration with Gulf and AIS as of January 2023. The data center will have a 40 MW capacity upon completion in 2025. Meanwhile in Indonesia, Singtel entered a joint venture with Telkom Indonesia and Medco Power in December 2022 to build Indonesia’s first data center with a capacity of 51 MW upon completion in 2025. In total, Singtel anticipates a combined capacity of more than 200 MW from these data centers to support the region’s increasing digitalization rate. It will also enable organic new growth for Singtel through new markets (i.e., Malaysia and Vietnam) and bring regional connectivity leadership and synergies with data centers, while offering carrier neutrality.

A Guaranteed Strong Partnership Justifies Data Center Investments and Expansion


According to Singtel, the overall data center supply in Southeast Asia is projected to grow at a Compound Annual Growth Rate (CAGR) of ~19% between 2021 and 2026. Moving forward with the support of KKR will position Singtel at the forefront of the data center market for the region. Considering KKR’s prior infrastructure investments in Southeast Asia, including First Gen and Aster Renewable Energy, which are clean and renewable energy providers in the region, Singtel can tap into KKR’s expertise for its future data centers. An example of this would be at DC Tuas in Singapore, which will be Singtel’s first sustainable data hub. DC Tuas aims to achieve decarbonization with its low Power Usage Effectiveness (PUE) and sustainable designs such as green roofs, recyclable materials, and water efficiency systems to incorporate into next-generation liquid cooling capabilities. With Singapore and Singtel leading the region’s data center development and now together with KKR’s investment, it is expected that capacity from sustainable data centers will increase rapidly across Southeast Asia.

Some of the benefits that these data centers offer from the perspective of the different stakeholder groups include the following:

  • Singtel: New revenue opportunities for Singtel, including colocation, hosting, and managed services. Singtel may also begin to improve its customer services through faster Internet speeds or personalized services such as streaming and content caching. Given Singtel’s data center initiatives and its relation to the wider Digital InfraCo entity, Singtel’s plans to segment its consumer and enterprise businesses may position the company as a leading technology corporation, in addition to a leading telecommunications company, for the future.
  • Businesses and Private Enterprises: For businesses/solution providers seeking to host data, cloud, or AI services for their respective enterprise use cases, accessibility will be key. With the growing regional supply of data centers, businesses don’t have to invest in managing or building their own data centers, yet they will have access to data centers that are in the regional vicinity. This saves them costs and will allow them to instead prioritize other investments such as improving their services. For example, a manufacturing company can adopt edge AI to run its smart manufacturing systems or smart factory floor. This can help enhance efficiency and boost productivity in the factory. Separately, these regional data centers will provide businesses with sufficient computing resources and storage capacity that businesses need to innovate.
  • Consumers: More on the downstream services. Regional data centers can reduce the proximity to the end users running the applications. This will give consumers and end users faster and more reliable data because the data do not need to be transmitted back to a faraway data center. Consumers may also receive better access to online services and an improved online experience.

For Singtel, the partnership with KKR will provide the telco with the necessary strategic factors to bolster its regional data center business formed in mid-2023. It is also a timely pivot and transformation for Singtel to change its role from just a telco to a regional technology partner for organizations, as well as to satisfy its ambition as a leading green and sustainable data center platform.


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