Sweet deal for Time dotCom’s data centre business

Time dotCom will sell 49% of the ordinary shares and 100% of the irredeemable convertible preference shares in AIMS 

TIME dotCom Bhd has undertaken a major corporate deal for its valued data centre business, a move seen positively by the investing community. 

On Nov 23, Time dotCom announced that it was selling a controlling stake in AIMS Data Centre to DigitalBridge Group Inc, a global owner and operator of digital infrastructure assets. The underlying idea was to accelerate the expansion of its data centre business across Asia. 

AIMS is Malaysia and South-East Asia’s carrier-neutral data centre and managed services provider. As the anchor site for the Malaysian Internet Exchange (MyIX), it handles trac for over 88 peers and networks with international connectivity for customers from various industries. It is headquartered in Kuala Lumpur with data centre presence in Kuala Lumpur, Cyberjaya, in Malaysia; Singapore and Bangkok (Thailand). 

“We view this development positively,” Hong Leong Investment Bank Bhd (HLIB Research) said in a note released a day a#er Time dotCom announced the deal in an exchange $ling. 

It said the deal allows Time dotCom to monetise its data centre business by receiving material cash proceeds; rightsizing its balance sheet; and while retaining significant strategic and operational in%uence and economic exposure over the future growth of AIMS. It downgraded the stock to ‘Hold’ with a target price of RM5.21, due to the limited upside. 

“We like Time dotCom as its retail is gaining momentum on the back of reach expansion and undisputable high-value products. Also, the data centre is expanding resiliently as IT outsourcing, cloud computing and virtualisation are widely adopted. However, we opine that the risk and reward are balanced at the current juncture,” it added. 

In the deal, Time dotCom will sell 49% of the ordinary shares and 100% of the irredeemable convertible preference shares in AIMS Data 

Centre Holding Sdn Bhd, as well as 21% of the ordinary shares in AIMS Data Centre (Thailand) Ltd. The transaction is expected to close by the end of the third quarter in 2023 (3Q23), subject to certain conditions precedent, including Time dotCom shareholder approval, being satisfied. 

The deal is expected to result in a special dividend of up to RM1 billion to Time dotCom shareholders. Its largest shareholder is Pulau Kapas Ventures Sdn Bhd with a 28.94% stake, followed by Khazanah Nasional Bhd (10.67%) Employees Provident Fund (6.42%) and Retirement Fund (Inc) or KWAP (5.72%). 

As part of the strategic partnership, Time dotCom said the overall AIMS business is being valued at an enterprise value of RM3.2 billion. This compares to its current book value of RM240 million and represents a significant gain since Time dotCom first acquired AIMS in 2012 for RM119 million. 

“This strategic partnership allows us to crystallise substantial value from the investment we have made in AIMS over the years. Proceeds from the transaction of approximately RM2 billion will partly be used to pay a special dividend of up to RM1 billion to our shareholders, and the balance will be reinvested into the group to further grow shareholder value,” Time dotCom commander-in-chief Afzal Abdul Rahim said in the statement. 

The partnership between Time and DigitalBridge is premised on bringing together a unique combination of two entities with distinctly different backgrounds — a focused telecoms and data centre operator with assets across Asean, and a digital infrastructure investor that has enabled the growth of some of the most successful data centre and digital infrastructure companies around the world, the company said in an exchange $ling recently. 

It said both parties envisage a rapid and tactical expansion of data centre facilities across primary and secondary cities in Asean and beyond with a focus on providing best-in-class services to multinationals, large enterprises, content providers, Internet infrastructure providers and financial institutions. 

It said the plans would centre on AIMS as the primary platform for expansion while making Malaysia a core hub and gateway for greater connectivity in the region. 

AIMS is Malaysia’s highly connected, ecosystem-centric data centre, badged as the home of the Malaysian Internet. AIMS’ data centres currently include its %agship facility in downtown Kuala Lumpur, a state-of-the-art purpose-built site in Cyberjaya and a new data centre in downtown Bangkok, the company said. 

On the rationale for the move, Time dotCom said following a strategic review of its data centre business in late 2021, it found significant opportunities in under-served markets across Asia. 

Aggressively pursuing these opportunities would require significant investments as well as a deep understanding of global trends in the space, an ambition that the company felt would be best realised with a strategic partner that has a global lens. 

In the same statement, DigitalBridge MD and Asia head Justin Chang said AIMS operates some of the most strategic data centre assets in Asean. 

DigitalBridge is a global digital infrastructure investment firm. With a heritage of over 25 years investing in and operating businesses across the digital ecosystem including cell towers, data centres, fibre, small cells and edge infrastructure, the DigitalBridge team manages a US$50 billion (RM224.57 billion) portfolio of digital infrastructure assets on behalf of its limited partners and shareholders.

Headquartered in Boca Raton, DigitalBridge has key offices in New York, Los Angeles (US); London (UK); Luxembourg (Europe) and Singapore.

  • This article first appeared in The Malaysian Reserve weekly print edition