Singtel to build regional data centres in Indonesia and Thailand with Telkom and Gulf Energy tie-up

Singtel is beefing up its regional data centre business by entering into advanced talks with Telkom Indonesia and inking a Memorandum of Understanding with Thailand's Gulf Energy. The Singapore telco is in discussions with Telkom Indonesia to explore acquiring and building data centre assets in Indonesia and the region. Meanwhile, its MoU with Gulf Energy will allow both parties to pursue the opportunity of building and developing data centres across Thailand. 

Singtel's regional data centre business will form part of a regional digital infrastructure platform to capture new growth opportunities arising from the digital wave sweeping Asia. Singapore, Thailand and Indonesia jointly make up more than 70% of the data centre market in ASEAN, Singtel said. 

These partnerships come as part of Singtel’s plans to optimise and grow the value of its portfolio of quality infrastructure assets including mobile towers, data centres, subsea cables and satellites, by capitalising on structural tailwinds of digitalisation, soaring demand for data accelerated by COVID-19, and burgeoning investor demand for infrastructure as an asset class. Given Singapore’s importance as a regional data centre hub in Asia, Singtel’s data centre business will be a key pillar of the data centre platform.

Singtel’s regional data centre strategy is premised on offering a differentiated value proposition to customers – one that is carrier-neutral while providing access to bundled services that draw on Singtel’s ecosystem such as connectivity, cybersecurity and hybrid cloud services. On the sustainability front, Singtel will also launch an initiative to invite companies in the ecosystem to ideate and co-create solutions to build the greenest data centres in the region. Singtel's data centres will also be undertaken in full compliance and support of the government’s overall plans for the data centre industry.

Singtel's group CEO Yuen Kuan Moon said that the rise of digital technology and its accelerated adoption on the back of COVID-19 has had major implications for the physical infrastructure that facilitate and support the overwhelming demand for data connectivity. "From our telecom towers to our data centres, it is imperative that we restructure our assets and re-organise our business to better fund, improve and grow our digital infrastructure. Not only will this secure our place in the digital economy, but it will also allow us to help keep our communities supported and economies up and running," he added.

Demand for data centres has surged since the COVID-19 pandemic, with data consumption in Asia expected to propel the region to become the largest data centre market globally, reported Singtel. According to Frost and Sullivan 2020 Data Centre Services Market Forecast, ASEAN’s data centre capacity is poised to grow at a compound annual growth rate of 18% from 2020 to 2025, especially in Singtel’s regional associates’ markets, driven by hyperscale cloud-based service providers looking to be closer to users while meeting data residency standards.

Data centres are a first step in the establishment of a regional digital infrastructure platform across multiple asset classes. The platform will own and manage digital infrastructure assets with a strong commercial focus to improve capital efficiency and return on invested capital while supporting Singtel’s business needs. Singtel seeks to grow this business in partnership with long-term capital providers with complementary capabilities and networks, through further investments in next-generation infrastructure regionally. Singtel currently owns prime data centre assets which contribute revenue of over SG$250 million, and earnings before interest, taxes, depreciation, and amortisation margins of over 60%.

"With the blistering pace of digital growth, we are seeing strong demand for an integrated network of data centres across different markets to deliver consistent standards and value-added services to customers as they scale their presence regionally. Our established track record, customer relationships and deep links with local partners in other markets position us well to capture this new growth,” added Yuen.

Separately, Singtel recently called for a pitch covering creative for brand, B2B and social which is currently being handled by R3, MARKETING-INTERACTIVE understands. It is also understood that the appointment is for a period of three years, and Hogarth has been retained for creative production. In 2019, Singtel appointed several agencies to its roster, adopting a lead agency model; which saw BBH as strategic brand lead, OgilvyOne for B2B duties and GOODSTUPH for social and content - a similar model will be undertaken this time as well. 

Earlier in July, Singtel had retained its incumbent OMD as its media agency for the Singapore market following a pitch that was called last year. The pitch was called as part of its usual media review, and R3 was handling the process. All in all, OMD has been working with Singtel since 2018. The media review came shortly after Singtel announced last year that it would be making changes to its top brass with Yuen, CEO of its Singapore consumer business and chief digital officer, to succeed Chua Sock Koong as group CEO from 2021.

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