TLKM – Breaks ground in Batam as construction of HDC kicks off

Telkom Indonesia (TLKM) with other partners, Singtel and Medco Power have launched a ground breaking ceremony for the construction of hyperscale data (HDC) center in Batam. The Batam HDC, which is under NeutraDC, is formed under a JV with Singtel and Medco Power stakes at 35% and 5%, respectively. The hyperscale data center, which is the second after Cikarang HDC, will have a 17x3 MW in capacity, expected to be completed in the next two years. The Construction of Batam HDC is aimed to cater high demand from Singapore whose excess estimated at 500MW. In addition to Batam, TLKM eyes to build HDCs in Manado and East Kalimantan. (Source : Company) Comment: We view that the construction of hyperscale data center is consistent with the company’s 5 bold moves strategy, aiming to diversify and unlock value of its various assets including data center assets. The company has so far had 27 DCs that spread across the country and 5 DCs abroad both under Telin and Telkom Sigma. In the future TLKM aims to consolidate its DC assets under Telkom Data Ekosistem (TDE/NeutraDC). Total value of investment of Batam HDC is estimated to be USD612 mn, with assumption of USD12 mn/MW. We believe that TLKM could be a fit beneficiary to cater strong Singapore’s market, based on its proximity and competitive electricity tariff which is currently at USDc10/kWh, compared to Singapore’s at USDc30/kWh. In terms of electricity rate, the closest competitor could be Malaysia especially Johor Bahru, yet with recent Malaysian vernment’s decision to impose a surcharge of RMc3.7/kWh, it gains strong advantage to Batam HDC. We will provide more details on our upcoming report.