A significant chunk of data centers in Asia will be changing ownership structure. The Indian carrier Tata Communications is selling a 74% stake in its data center business in India and Singapore to ST Telemedia. Tata Communications will retain a 26% stake in the business, which becomes a joint venture.
The deal will move 17 facilities, 14 across India and 3 in Singapore into STT's orbit, if not all the way into its column. It's the first assets in India for a growing regional data center portfolio. Two years ago, ST Telemedia bought a 40% stake in China's GDS Services, and last year moved to expand its footprint organically in Singapore itself. Taking the joint venture approach into both China and India is the smart way to tackle those infrastructure markets, which outsiders have long had trouble penetrating via more direct means.
According to the WSJ, the transaction values the business at $640M, which means Tata will be getting about $474M, which will likely be applied to the task of improving Tata's balance sheet. They had moved the data center business to its own entity a few years ago, indicating an interest in pursuing something like this. In addition to the cash, Tata says having the two companies share the costs of operation will be beneficial.
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