SingTel - Maybank Research 2024-06-19: Doubling Down On Data Centres

• SingTel announced two material data centre investments:
  1. SingTel’s data centre (DC) arm, Nxera, yesterday announced a JV with Telekom Malaysia to build a 64MW DC in Johor Malaysia. SingTel will own 49% of the JV. The partners have committed initial capital of MYR1,152m in the JV and it has acquired a 169,000 sqm land plot in Johor for MYR178m.
  2. - Read this at SGinvestors.io -

Key takeaways from SingTel's post-announcement management call

• - Read this at SGinvestors.io -
• While AI workload demand is evolving and customer discussions are shifting from CPUs to GPUs, management of SingTel noted customer demand has shifted from 5-10MW to 20- 30MW.
• It also noted that Nxera’s focus is on expanding within ASEAN/tier-1 markets, and thus the STT GDC investment will give it much wider exposure.
• Capital outlay in both ventures are considered investments and thus is on top of the company’s FY25E capex budget. While the target valuation paid for STT GDC is not disclosed, SingTel's management noted that it was below 32x EV/EBITDA, which it fetched for its own partial DC divestment in 2023.
• SingTel's management committed to its guidance of S$3-6 cents in value-realization dividends on top of regular dividends even with the new investments announcement.

Our take: Net positive

• Read more at SGinvestors.io.

Hussaini Saifee Maybank Research | https://www.maybank-ke.com.sg/ 2024-06-19 SGinvestors.io

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