Singtel's Nxera could fetch S$4.5bn in listing, say analysts

Nxera's Estimated Market Value

Analysts at UOB Kay Hian project that Singtel's data centre business, Nxera, could command an equity valuation of S$4 billion to S$4.5 billion if it were to pursue a public listing. This estimate, provided by UOB Kay Hian's Chong Lee Len, is based on a preliminary assessment of Nxera's potential market position and financial trajectory.

Chong Lee Len also maintained a "buy" recommendation on Singapore Telecommunications (Singtel) shares, setting a target price of S$5.50.

The valuation methodology for Nxera considered an enterprise value multiple of 20 times its projected earnings before interest, taxes, depreciation, and amortisation (EBITDA), reflecting an optimistic outlook on the digital infrastructure sector's growth potential in Asia.

Capacity and Earnings Outlook

The S$4 billion to S$4.5 billion valuation for Nxera is supported by specific operational and financial forecasts. UOB Kay Hian analysts anticipate that Nxera's EBITDA will exceed S$300 million by the financial year 2028, indicating substantial profitability as its operations scale.

Furthermore, Nxera is on track to significantly expand its physical footprint, with plans to operate over 230 megawatts (MW) of data centre capacity across key markets including Singapore, Indonesia, and Malaysia by the end of FY2027.

Beyond this immediate target, the company's development pipeline suggests a further increase in capacity, potentially pushing total available power above 460 MW, positioning it as a significant regional player in the rapidly expanding data centre market.

Singtel's Strategic Asset Optimisation

Singtel is actively exploring strategic options for its Nxera data centre unit as part of a broader initiative to maximise shareholder value from its digital and infrastructure assets.

The telecommunications giant is considering various avenues, including the establishment of a tax-efficient data centre Real Estate Investment Trust (REIT) or a direct listing of Nxera on a public exchange.

These considerations are in line with Singtel's stated aim to achieve higher returns from its core growth engines, which encompass its Australian subsidiary Optus, its expanding data centre portfolio, and strategic investments in artificial intelligence (AI) infrastructure.

While these discussions are currently in their preliminary stages, they highlight Singtel's commitment to unlocking the inherent value within its diverse operational segments.

Implications for Regional Digital Infrastructure

The analyst estimate for Nxera's potential valuation provides a key reference point for decision-makers assessing the digital infrastructure market in Southeast Asia.

For investors and industry participants, the S$4 billion to S$4.5 billion equity value, coupled with projections of over 460 MW in pipeline capacity, underscores the significant capital appreciation potential within the region's data centre sector.

Companies operating or planning to enter this market can use these figures to benchmark asset valuations and assess investment viability.

As Singtel advances its preliminary considerations for Nxera, any formal announcement regarding a listing or REIT structure, expected in late 2026 or early 2027, will offer more concrete data points on market appetite and the cost of capital for large-scale data centre operations in Singapore, Indonesia, and Malaysia.