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Telkom Indonesia eyes sale in data centre business

Written by Wed 14 Feb 2024

Indonesia’s telecommunications giant, Telkom Indonesia, is exploring the sale of a stake in its burgeoning data centre business, with plans to conclude the sale in the latter half of this year.

The state-owned company is currently in the process of selecting a financial adviser and deliberating on the extent of the stake to be sold, as stated by Ahmad Reza, Telkom’s Senior Vice President of Corporate Communication and Investor Relations to Reuters.

Strategic Expansion and Global Interest

Sources familiar with the matter anticipate the initiation of a minority stake sale in March, valuing Telkom’s data centre arm at over £797.1 million ($1 billion).

While specific details regarding the stake size, sale commencement, and valuation remain under discussion, the move aims to monetise the data centre segment without setting explicit targets.

“As the internet penetration worldwide is growing rapidly, the data centre business is becoming a hot asset to invest in, including in Indonesia,” said Reza.

The inclusion of a global strategic partner or robust financial investors is expected to propel Telkom’s data centre operations to new heights, enhancing its footprint both domestically and internationally.

Telkom, the largest telecommunication entity in Indonesia, boasts a portfolio of 28 data centres—23 within the country and five abroad, as reported in its 2022 annual documentation.

Competing against entities like DCI Indonesia, Princeton DG, and NTT Communication, Telkom is positioning itself in a rapidly expanding market.

The burgeoning demand from global investors for infrastructure assets like data centres, particularly in Southeast Asia, underscores the region’s growth potential and the promise of stable, long-term returns in the sector.

This trend is evidenced by significant investments like KKR & Co’s acquisition of a 20% stake in Singapore Telecommunications’ regional data centre business for S$1.1 billion (£652.2 million or $818 million), underscoring the sector’s lucrative appeal.

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Written by Wed 14 Feb 2024

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