Analysts confident of Singtel’s ATN sale and data centre ambitions

Singtel tower network
Image by Fahroni | Bigstockphoto

In favour of possibly becoming a regional data centre, Singtel is ditching its Australian telecom tower network to finance 5G expansion and increase data centre assets.

Singapore’s largest mobile network is selling 70% of its 2,312 mobile network towers for AU$1.9 billion (US$1.38 billion), with AU$500 million (US$363 million) provided as a return of capital by Australia Tower Network (ATN) to Singtel and the same amount applied to pay off ATN’s loans to Singtel’s Australian subsidiary Optus.

Analysts believe this is beneficial to Singtel, which has been on a straight four-year decline in its full-year core earnings. According to RHB, Singtel may see a rebound, considering it will realise a S$400 million divestment gain by Q3 of next year. Singtel aims to invest the remainder of the proceeds on 5G deployment and expanding its technology services arm NCS in Australia and Singapore.

After the telco’s May announcement of a major strategic reset, this move is the first value unlocking of infrastructure assets and capital recycling. In May, Yuen Kuan Moon, Group CEO, Singtel, said that the strategic reset is Singtel’s most significant move in recent years. The reset aims to capitalise on technology proliferation and large-scale digitalisation to implement profound changes and reposition the telco.

In the same announcement, Singtel highlighted that it is looking at ways to use its infrastructure assets to unlock latent value and grow as rapid digitalisation drives demand for critical infrastructure. The Group’s current global infrastructure assets portfolio includes towers, satellites, subsea cables, and data centres worldwide.

Before the announcement, Singtel has already begun a partial sale via auction of Optus’ towers in Australia to maximise profits and recycle assets.

Analysts from UOBHK estimate Singtel’s regional data centre to be valued at S$8 billion by 2026, with around 100 megawatts of capacity added to the telco’s DC portfolio over the next few months.

“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, it will also allow us to help keep our communities supported and economies up and running,” Yuen Kuan Moon said in a statement.

Related article: Singtel begins strategic review of digital assets after major losses

Singtel begins strategic review of digital assets after major losses

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