Singtel Forms Consortium with KKR for Landmark S\$6.6 Billion Acquisition of STT GDC

Key Transaction Highlights

• Singapore Telecommunications Limited (Singtel), via its subsidiary Singtel Interactive Pte. Ltd., and global investment firm KKR, have agreed to form a consortium to acquire 81.7% of STT GDC Pte. Ltd. from STT Communications Ltd.
• The acquisition will be executed through Opal Bidco Pte. Ltd., with Singtel holding a 25% stake and KKR a 75% stake in the consortium’s holding company, Opal Holdco I Pte. Ltd.
• Total consideration for the shares is S\$6.6 billion in cash. Payment will be split into two tranches: S\$3.3 billion upfront at closing, and S\$3.3 billion within one year or upon a change of control/monetisation event.
• Singtel has committed S\$740 million in cash for its equity injection into Opal to fund part of the acquisition. This sum will be sourced from internal cash resources.
• KKR’s portion and the remaining consideration will be funded via equity and S\$5 billion in secured debt facilities, indicating robust support from both local and international banks.

Financial and Strategic Impact

• Upon completion, Singtel will have an aggregate equity interest of ~25% in STT GDC (fully diluted and as converted basis), strengthening its position in global data centre markets.
• STT GDC’s financials (as at 31 Dec 2024): Book value S\$5.3B, Net tangible assets S\$4.7B, and Net loss of S\$185M for FY2024.
• EPS Impact: The transaction is not expected to have a material effect on Singtel’s EPS. Illustrative proforma for FY2025 shows EPS moving marginally from 24.3 cents to 24.2 cents.
• With the investment equity-accounted, Singtel will not consolidate STT GDC’s debt or financials, helping preserve Singtel’s investment grade credit rating and existing dividend policy.
• This transaction significantly increases Singtel Group’s data centre footprint, combining STT GDC’s >670MW operational capacity with Singtel’s Nxera platform, reaching a total of approximately 2.8GW design capacity (excluding US and China), positioning Singtel as a major global player.
• Strategic Rationale: The deal aligns with the Singtel28 growth plan, targeting data centres as a core growth engine. The expanded platform will support the rapidly growing demand for AI and cloud services in Asia Pacific and globally, providing exposure to high-growth Tier-1 hubs and supporting hyperscalers and enterprises.

Shareholder Considerations and Price Sensitive Information

• Temasek Holdings is a controlling shareholder (holds ~51.69% of Singtel). The seller (STT Communications Ltd.) is an indirect wholly owned subsidiary of Temasek, making this an “interested person transaction” under SGX rules.
• Singtel’s committed sum of S\$740 million represents 4.51% of its latest audited consolidated net tangible assets (NTA), exceeding the 3% threshold for disclosure under SGX rules.
• All “interested person transactions” with Temasek and its associates year-to-date are within regulatory limits; the S\$740 million commitment is the largest reported in recent periods.
• Independent Financial Adviser (IFA): Ernst & Young Corporate Finance Pte Ltd has advised Singtel’s independent directors that the transaction is on normal commercial terms and not prejudicial to minority shareholders.
• Audit Committee Approval: Singtel’s Audit Committee has endorsed the deal as fair and in the interest of all shareholders.

Potential Share Price Drivers

• The scale and value of the acquisition (S\$6.6 billion) and Singtel’s substantial equity commitment could be viewed as transformative, expanding Singtel’s platform and growth prospects in the global data centre market.
• While EPS impact is projected to be immaterial in the near term, the long-term strategic value and exposure to high-growth digital infrastructure markets could enhance Singtel’s earnings and valuation over time.
• The deal’s structure (equity-accounting, no consolidation of debt) limits downside financial risk for Singtel and preserves balance sheet strength, which may be positive for investor confidence.
• Any regulatory or closing risks, or changes in market sentiment regarding data centre valuations, could affect Singtel’s share price.

Conclusion

This acquisition represents a major strategic move for Singtel, cementing its position as a leading global data centre operator outside the US and China. The transaction’s scale, structure, and future growth prospects in the AI and cloud sector are highly relevant for investors. While the immediate financial impact is limited, the long-term benefits and platform expansion could materially influence Singtel’s valuation and share price trajectory.

Disclaimer

This article is for informational purposes only and does not constitute financial advice or a recommendation to buy or sell shares in Singapore Telecommunications Limited or any other entity. Investors should conduct their own due diligence and consult their professional advisers before making investment decisions. The information provided is based on publicly available sources and company disclosures as at the date of publication.

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