CEO Morning Brief

Telekom Malaysia Teams Up With Singtel to Develop Data Centre in Johor

Publish date: Wed, 19 Jun 2024, 09:58 AM
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TheEdge CEO Morning Brief

KUALA LUMPUR (June 18): Telekom Malaysia Bhd (KL:TM) announced on Tuesday that it is partnering Singapore Telecommunications Ltd (Singtel) to establish greenfield data centre facilities in Iskandar Puteri, Johor.

The announcement confirms The Edge’s report last week which stated that Singtel, through its indirect subsidiary Nxera My Pte Ltd, had been in discussions with Malaysian authorities to establish a data centre in Iskandar Puteri.

In a filing to the stock exchange, TM said it has via its wholly owned unit TM DC Educity Sdn Bhd entered into a joint venture agreement with Nxera to establish a a JV entity named ST Dynamo DC.

ST Dynamo, it said, is acquiring a freehold land spanning 168,959 sq m from River Retreat Sdn Bhd for RM178.23 million.

River Retreat, which is involved in property investment and property development, is wholly owned by Iskandar Coast Sdn Bhd which in turn is an 80%-owned subsidiary of Iskandar Investment Bhd (IIB). Khazanah Nasional Bhd is the largest shareholder in both IIB with 60% stake and TM with 19.65% stake.

TM said TM DC Educity will hold a 51% stake in ST Dynamo with Nxera controlling the other 49% stake. The two companies will contribute proportionally to the total committed equity funding for the JV entity, estimated at RM1.15 billion, with TM DC Educity injecting RM588 million.

“Embarking on the proposed JV enhances TM’s long-term data centre strategy, strengthens TM’s position as one of the market leaders in Malaysia’s data centre landscape and is in line with TM’s aspiration of Pioneer, Win and Revitalise 2030 to become a digital powerhouse by 2030. The proposed data centre will be an addition to TM’s existing seven data centres across Malaysia, including keystone locations in the Klang Valley and Iskandar Puteri, Johor,” said TM.

It added that the data centre will lay a robust foundation for TM to capture the rising demand and opportunities from the next generation of artificial intelligence (AI) application providers, hyperscalers, over-the-top service providers, multinationals and enterprises.

“The JV parties may decide to progressively scale up the proposed data centre over several phases to achieve a targeted capacity of up to 200MW (megawatts) in the long term,” the group added.

Land acquisition

TM said the purchase price of RM178.23 million for the land from River Retreat reflects a willing-buyer, willing-seller agreement, considering the land's market value of RM229.15 million as evaluated by valuer Rahim & Co International Sdn Bhd based on its potential use as a data centre.

“For information purposes only, the valuer has determined the valuation of the land on an as-is basis for mixed commercial use to be RM136.4 million. The land is situated off Jalan Kampung Lalang and adjacent due south of Taman Eko Botani, EduCity, Iskandar Puteri, Johor,” the group said.

The purchase consideration is to be fully satisfied by the JV company using internal funds or external funding, if required, including from the total committed equity funding to be injected into the JV company.

The JV and land acquisition, slated for completion by the first half of 2025, are contingent upon approvals from TM's non-interested shareholders, the Johor state government, the Equity Development Division of the Ministry of Economy.

Shares of TM closed 29 sen or 4.45% higher to RM6.81 on Tuesday, giving the group a market capitalisation of RM26.13 billion. Year-to-date, the counter has risen over 21%.

Source: TheEdge - 19 Jun 2024

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