- Singtel and KKR announced the acquisition of STT GDC at an EV valuation of US$13.8b. STT GDC owns 683MW of data centres spanning Asia and Europe and a potential pipeline of 1.7GW. Singtel will pay S$740m and including its prior investments in STT GDC, it will hold a ~25% stake in the consortium and may further put S$400-500m for future capex.
A favourable deal.
- - Read this at SGinvestors.io -
- We see the deal favourably as it strengthens Singtel’s AIaaS/GPUaaS value proposition while also retaining balance sheet strength. Maintain BUY on Singtel.
Superior growth & scale but there are unknowns.
- - Read this at SGinvestors.io -
- STT GDC’s revenue expanded 24% in 2024 while net core losses reduced to S$5m from S$43m in 2023, although reported losses were high (S$184m in 2024) owing to discontinued operations. While a strong DC pipeline is in place amidst strong demand, management also noted that there are older data centres in the portfolio which may need retrofitting.
- Amid a strong development pipeline and potential retrofitting capex, the earnings trajectory of STT GDC could be bumpy, although management also noted that given its minority stake, the impact at the Singtel level will be minimal.
Balance sheet strong; elevated capital management intact.
- Read more at SGinvestors.io.
