In this day and age, telecommunication has become an integral part of our lives. Whether it’s for work or personal life, we heavily rely on telecommunication and internet services. One of the pioneers in the telecommunication industry is the Singapore Telecommunications Limited or Singtel. That might provide some insight into why KKR, a private equity firm, is interested in the company, specifically in a valuable part of the business, the data centers.
In this post, we will learn about Singtel, what it offers, how long it has been around, and why KKR is interested in acquiring the data center segment of Signet.
A Brief Overview on Singtel
Singtel’s history can be traced back to 1879, when the first telephone exchange was founded in Singapore. Singtel was later formed in 1992 as a result of the merger of Telecommunications Equipment and Singapore Telecom. Since then, Singtel has become the largest telecommunications company in Singapore and a leading regional communication provider in the Asia Pacific.
The firm has strong presence in the telecommunications market, commanding over $49 billion in assets, $16 billion in revenues, and $1 billion in net income. This deal also shows even more signs of life in the data center business. A business that will likely see more interest with the explosion of AI.
Singtel’s main offering includes a range of services such as mobile, internet, and TV. Their mobile network covers 99.9% of Singapore, and they have a wide range of mobile plans to cater to different needs and budgets. They also offer home internet services that come with free installation, setup, and even a router. Additionally, Singtel offers a range of TV packages that include live sports, movies, and other entertainment channels.
Singtel also has an extensive international presence, with a major network of 735 million mobile customers across Asia, Africa, and the Middle East. They offer various services to enterprise customers, such as virtual office spaces, cloud solutions, and cybersecurity services. Singtel is also invested in developing newer technologies such as 5G, IoT, and AI, making them one of the key digital solution providers in the region.
Not only does Singtel provide quality services, but they also prioritize customer satisfaction. They have various customer service channels such as their hotline, email, and even online support for quick troubleshooting and help. They have also introduced various rewards and loyalty programs for their customers.
In summary, Singtel has been around since the inception of telecommunication in Singapore, and it has come a long way since then. The firm offers a wide range of services, such as mobile, internet, and TV, with a focus on customer satisfaction. Singtel is not only leading the telecommunications industry in Singapore but also in the entire Southeast Asian region. As Singtel continues to innovate and bring new technologies to the market, it assures us of a better and connected future.
Singtel and the KKR Deal
Singapore Telecommunications Limited (Singtel) announced last week that it had signed an agreement to sell a 20% stake in its regional data center business, a subsidiary of the group, to private equity firm KKR. The deal, which values the business at over $5 billion or , will bring in a net gain of approximately S$1.4 billion ($1.1 billion) for Singtel. The partnership with KKR is expected to boost the company’s capacity to expand its digital business and create new opportunities for growth.
The reasons for the KKR deal are manifold. Over the past few years, Singtel has made great strides in expanding its service offerings beyond traditional telecoms. However, as the company expanded further into adjacent areas of business, margins remained thin, particularly in the digital business ventures. This struggle was noted in both its FY2020 and 1Q2021 financial results.
The KKR deal helps the business unit unlock value while selling off a non-core asset. The agreement puts the data centers on track for a potential initial public offering (IPO) later down the line. This could provide shareholders with a clear view of what is arguably Singtel’s most valuable digital asset, which was previously buried deep within the telecoms giant’s balance sheet.
Furthermore, the deal helps Singtel move closer towards a data center business model that relies mainly on services collaborations. While Singtel keeps a lot of its power and data capacities in-house, some facilities are run by third parties. These providers give Singtel the chance to focus on core capabilities, while also keeping the customer’s IT needs safe. The KKR partnership could help Singtel leverage global expertise to optimize this collaborative strategy.
As for KKR, the collaboration fits into the company’s digital infrastructure investment strategy. The private equity firm has been increasing its presence in Singapore over the past few years, starting with an office launch in 2012. KKR sees Singapore as a hub for growth and has made several bets within the country in recent years. They are drawn to Singapore’s political stability, reliable infrastructure, and increasing opportunities for infrastructure investments.
Finally, the deal advances the continued growth of the data center market in APAC, which is expected to experience a CAGR of at least 10% from 2021-2026. This growth trend is driven by the rise of fourth industrial revolution industries like artificial intelligence (AI), the Internet of Things (IoT), and machine learning (ML), as well as the ongoing migration to cloud-based solutions. Singtel has gone into the deal with KKR with a focus on growth and innovation and understands the state of technology investment in Singapore and across the region.
In conclusion, the KKR and Singtel data center deal is an ambitious unlocking of Singtel’s digital potential. The partnership allows Singtel to focus on its core business strengths while leveraging global expertise to optimize its collaborative strategy. The collaboration fits squarely into KKR’s increasing presence and growing investment in Singapore. With the rise of fourth industrial revolution technologies, as well as the ongoing cloud migration, the deal comes at a perfect moment. The real quiet question is what Singtel’s digital business portfolio will look like next, as they continue to expand into adjacent areas of business within the digital landscape.