“Telkom is exploring the possibility of acquiring a $1 billion data center”

State-owned telephone operator PT Telkom Indonesia is considering attracting investors to its data center business amid growing interest in digital infrastructure assets, according to people familiar with the matter.

The Jakarta-listed telecoms giant has held initial talks with potential investors and may ask for a valuation of more than $1 billion for a deal operation, the people said, asking not to be identified as it is a private matter. Options being considered include selling a minority stake in the data center, the sources said. The company said last year that it plans to conduct an initial public offering in 2023.

Discussions are at an early stage and may not result in any deals, people say. Telkom has not yet decided whether it will raise investors or conduct an IPO to operate the data center, CEO Ririek Adriansya said in response to an inquiry from Bloomberg News, adding that the business could be valued at around 25 times Ebitda.

“We will see how the consolidation and development of our data center progresses,” he said in a text message. “We will also need to examine macroeconomic conditions before deciding on the right scenario.”

Global investment funds are interested in digital infrastructure assets in Southeast Asia, where there is a growing demand for e-commerce and financial technology services. Apart from Indonesia, the Philippines has also become a hotspot for transactions in assets such as mobile phone towers and data centers.

Telkom, which has a market value of about $28 billion, is reorganizing and monetizing its diverse assets, from mobile and broadband to satellites and digital content.

The company is considering merging its broadband and wireless business to create a $30 billion-plus company, Bloomberg News reports. Banks including Goldman Sachs Group Inc. and PT Bank Mandiri were brought in to work on the deal, people familiar with the matter say.

Telkom’s infrastructure services arm, known as Mitratel, raised about Rs 18.8 trillion ($1.2 billion) in an initial public offering in Jakarta last November. Bloomberg News