LG Sinar Mas, the joint venture company between Indonesian conglomerate Sinar Mas Group and South Korea’s LG CNS, is setting up a $300-million new data centre in South Jakarta.
Sinar Mas Group, through its digital infrastructure investment arm SM+, and LG CNS set up the joint venture in March 2024. The JV’s primary goal is to provide advanced data centre and cloud services to businesses in Indonesia, with plans to expand into smart city development and financial services, according to LG Sinar Mas CEO Han Donghyup.
“We aim to become the market leader in the Indonesian digital infrastructure and information technology services through this partnership. We will explore any potential investment opportunities in this sector to support the goal,” Herson Suindah, SM+ CEO told media.
Suindah explained that SM+ had acquired 24 data centres from Sinar Mas’s telecom subsidiary PT Smartfren Telecom Tbk, which serves as a foundation for the joint venture’s operations. SM+ remains open to opportunities in digital infrastructure, including data centers and fiber assets, to strengthen its position in the market.
Founded in 1987, LG CNS is a leading provider of digital transformation solutions, with operations in 13 locations across the Asia-Pacific, North and South America, and Europe. It operates eight data centres in South Korea, making it one of the country’s largest players.
The combination of LG CNS’s technical expertise and Sinar Mas’s understanding of the local market positions LG Sinar Mas as a strong contender in the digital technology sector.
In Indonesia, state-owned Telkom is seeking a strategic investor for its data centre business, PT Telkom Data Center (NeutraDC). Financial advisors, including Goldman Sachs and Mandiri Sekuritas, are working to finalise a deal by late 2024 or early 2025. Telkom Indonesia currently holds a 79% stake in NeutraDC, with the remaining shares owned by PT Sigma Cipta Caraka.
Another firm ST Telemedia Global Data Centers (STT GDC) has begun construction of its second data centre in Indonesia. The centre will have a capacity of 24 MW and is expected to be completed by 2026. This facility will complement its first data centre, which has been operating since June 2023 with a capacity of 18 MW. The company plans to build four data centers in Indonesia. In June 2024, STT GDC raised $1.3 billion in investment from KKR and Singapore’s telecom firm Singtel.
The Indonesian digital infrastructure sector has seen increased activity, with mergers and acquisitions reshaping the landscape. Smartfren, Sinar Mas’ telco subsidiary, is in the process of merging with XL Axiata in a $3.45-billion deal. Both companies have appointed underwriters to move forward with the merger. Despite this, Sinar Mas Chairman Franky Widjaja confirmed that the merged entity will continue to partner with LG Sinar Mas, especially in IT and digital infrastructure.
In addition to data centres, Indonesia’s fibre assets are also attracting significant interest. Link Net is reportedly engaged in a $400 million fibre asset deal, drawing interest from players like Protelindo and US-based investment firm I Squared Capital. Indosat is similarly exploring a sale of its fibre and submarine cable assets, aiming to raise between $1.5 billion and $2 billion.
