Telkom Indonesia explores selling minority stake of data center unit

Telkom Indonesia is planning to sell shares in its data center business – currently valued at over US$1 billion – to fund the unit's local and global expansion.

Ahmad Reza, senior vice president of corporate communication and investor relations, told Reuters that the group is in the process of choosing its financial advisers for the sale and expects it to be completed by the second half of the year.

Two sources with knowledge of the plan told Reuters that the sale of the minority stake is expected to kick off in March.

Reza said monetization of the data center business was still being discussed and Telkom does not have any specific target. The size and valuation of the stake is also still under discussion.

"As Internet penetration worldwide is growing rapidly, the data center business is becoming a hot asset to invest in, including in Indonesia," Reza added.

Finding strong investors for a minority stake would allow the Indonesian telco giant to expand its data center business which now has 28 facilities – 23 in Indonesia and five overseas.

Funding options explored

Over the years, Telkom Indonesia had explored several options to finance its data center operations. Besides selling a minority stake of the business, there were talks of raising cash via IPO in 2021.

Furthermore, Bloomberg reported in October 2022 that the telco operator was considering the sale of its entire data center for $1 billion.

Telkom Indonesia opened in November its latest "neuCentrIX'' data center in Banda Aceh on the southern island of Sumatra, which is geared to serve government services and local ISPs. A similar facility in Bandar Lampung – also located in Sumatra – was opened in August 2023.