ST Telemedia buys stakes in Tata's data centre units

ST Telemedia's Mr Sio (far right) and Tata Communications' Mr Kumar. Under the deal, STT GDC will acquire a 74 per cent majority stake in Tata Communications' data centre business in India and Singapore.
ST Telemedia's Mr Sio (right) and Tata Communications' Mr Kumar. Under the deal, STT GDC will acquire a 74 per cent majority stake in Tata Communications' data centre business in India and Singapore.PHOTO: SINGAPORE TECHNOLOGIES TELEMEDIA

Singapore Technologies Telemedia (ST Telemedia) will buy stakes in the data centre business of Tata Communications in India and Singapore, worth about 31.1 billion rupees (S$637 million) and $232.4 million respectively.

Temasek Holdings' ST Telemedia invests in the communications, media and technology sectors.

A joint statement released yesterday said ST Telemedia - through ST Telemedia Global Data Centres (STT GDC) - will acquire a 74 per cent majority stake in the communications provider's data centre business in India and Singapore.

Tata Communications will remain a significant shareholder, holding the other 26 per cent stake in the businesses.

The joint venture will include Tata Communications' 14 data centres in key cities across India and its three Singapore facilities.

The deal means that STT GDC will grow its global data centre network across four regions, including strong bases in two of Asia's largest growth markets - India and China.

ST Telemedia executive director Sio Tat Hiang said in a statement: "The latest addition of India to the STT GDC network will be a major impetus to advance the company's ambition to be a significant global data centre service provider."

ST Telemedia invested in a Chinese data centre operator in 2014. It previously invested in US-based data centre operators but later sold those stakes in 2005 and 2011 separately.

STT GDC chief executive officer Bruno Lopez noted that the investment will mean that STT GDC is "well positioned to become one of the largest Asian-headquartered data centre companies".

Tata Communications chief executive officer Vinod Kumar said: "This new joint-venture partnership will now allow us to hone our strategic focus on advanced services within the data centre that enable digital transformation for our customers, in addition to infrastructure services."

He added that the firm will be able to redeploy capital to other areas, and the focus will be developing and introducing its advanced managed services portfolio.

A 2016 report by consulting firm BroadGroup said data centres in South-east Asia expect substantial growth over the next two years, with investment expected to hit US$3.4 billion (S$4.7 billion) by the end of next year. It found that at least US$1.2 billion of new investment is planned over the next two years, excluding any investments yet to be announced.

Issues include fulfilling current investment plans, and power and connectivity matters, which are important in determining whether the region will meet growth forecasts by the end of 2017, it added.

A version of this article appeared in the print edition of The Straits Times on May 20, 2016, with the headline 'ST Telemedia buys stakes in Tata's data centre units'. Print Edition | Subscribe