Singtel, Telekom Malaysia further fuel Asia’s datacentre boom

• The growing demand for datacentre capacity is accelerating
• The Asia Pacific region is a hotbed of activity
• Singtel and Telekom Malaysia are the latest telcos committing to further expansion of the sector 

The datacentre sector is booming in the Asia Pacific region driven by growing AI activity and its associated capacity demands, with Singtel and Telekom Malaysia (TM) the latest telcos in the region to fuel the fire. 

In a statement, Singapore’s national operator unveiled it is part of a consortium, led by private equity firm KKR (Kohlberg Kravis Roberts), that has agreed to invest 1.75bn Singapore dollars (SGD) (US$1.3bn) in neutral datacentre operator ST Telemedia Global Data Centres (STT GDC).

According to the consortium, the initial investment will be made via redeemable preference shares, with detachable warrants. Upon exercise of the warrants in full, the consortium plans to invest an additional SGD$1.24bn (US$920m).

Singtel noted that the funding will go towards advancing STT GDC’s position in the markets in which it operates, and boosting its continuing international expansion and growth plans through organic and inorganic strategies.

The datacentre company, which is based in Singapore, will continue to be majority owned by ST Telemedia. It has more than 95 datacentres across 11 geographies, and its portfolio has a combined capacity of more than 1.7GW of in total.

“We see digital infrastructure, particularly datacentres, as a growth asset and compelling investment, with the remarkable rise of the sector driven by rapid digitalisation and AI adoption around the world,” explained Singtel’s group CFO, Arthur Lang. He added that the investment is “a solid opportunity” for the Singaporean operator to “gain exposure to an established platform” with a footprint in high-quality datacentre markets, which aligns with its goal to scale its digital infrastructure business.

KKR has been steadily focusing on investing in the Asia Pacific region’s digital infrastructure sector, including the acquisition of a 20% stake in the regional datacentre arm of Singtel’s Digital InfraCo unit, dubbed Nxera; an investment in Pinnacle Towers, a digital infrastructure platform with a strong focus on the Philippines; and a deal with OMS Group, a neutral subsea telecom cable services provider.

Meanwhile, Nxera has been advancing its own strategy this week as it is forming a joint venture with Telekom Malaysia (TM) to develop datacentres in Malaysia. The first goal for the pair will be building “a sustainable, hyper-connected AI-ready” datacentre campus in the state of Johor.

The new facility will address the needs of hyperscalers, next-generation AI application providers and enterprises pursuing accelerated digitalisation and cloud utilisation in the region. The campus will be the largest to date for both TM and Nxera, with plans for the initial phase to boast a capacity of 64MW, though this can be scaled up to 200MW if there is the market demand for it.

The facility will also be close to subsea cable links between Singapore and Malaysia and will be able to host “large computing and AI capabilities, such as requirements by cloud hyperscalers, GPU-as-a-service providers”. 

It will also feature advanced technologies, such as liquid cooling, to support high-power density workloads and operations efficiently, and will meet energy and environmental criteria, noted Telekom Malaysia.

According to the Malaysian telco, the joint venture is “a unique proposition, bolstered by the extensive subsea cable networks of TM and Singtel’s Digital InfraCo, which provide global connectivity and enhanced network performance with lower latency and improved reliability”.

TM’s group CEO, Amar Huzaimi Md Deris, explained that the joint venture underscores the two companies’ commitment to elevate ASEAN (the Association of South-east Asian Nations) as “the preferred digital hub destination”. “This collaboration of two main telcos in the region is unique,” he noted, adding that the deal will have a positive impact on the development of the digital ecosystem that not only benefits businesses but also nurtures future talent. 

Telekom Malaysia’s portfolio includes seven datacentres across its domestic market. 

Nxera is also developing three new “AI-ready” datacentres in the region – a 58MW datacentre in Singapore, as well as datacentres with partners in Indonesia and Thailand. Its overall pipeline capacity is set to increase from its current operational capacity of 62MW in Singapore to more than 200MW in the region in the next three years.

Singtel overhauled its structure in April 2023, which saw the creation of its standalone infrastructure unit, Digital InfraCo, comprising its regional datacentre business. Soon after this, it agreed numerous partnerships, including one with global AI chipset leader Nvidia and energy specialists to boost its datacentre ambitions in the region – see Singtel strikes green AI and datacentre partnerships.

Datacentre activity in the Asia Pacific region has been on the rise drastically this year in a clear sign that demand for capacity is unlikely to ease off due to the surge of AI and cloud service developments – see Asia is a hotbed of datacentre activity.

- Yanitsa Boyadzhieva, Deputy Editor, TelecomTV