By Yantoultra Ngui

SINGAPORE (Reuters) - Indonesia's state-owned communication giant Telkom Indonesia is considering selling a stake in its data centre business and is expected to finish the selling process in the second half of this year.

The group is in the process of selecting its financial adviser and considering how much stake to sell, Telkom Senior Vice President of Corporate Communication and Investor Relations Ahmad Reza said.

According to two sources with knowledge of the plan, a sale of a minority stake is expected to kick off in March and value Telkom's data centre business at more than $1 billion.

Reza did not comment on the size of the stake, or when the sale would kick off or the valuation, but said monetization of the data centre business was still being discussed and Telkom does not have any specific target.

Roping in a global strategic partner or strong financial investors is expected to help Telkom expand its data centre business further, both locally and globally.

Telkom, Indonesia's largest telecommunication group, has 28 data centres, which includes 23 at home and five overseas, according to its 2022 annual report.

It competes with several companies that have also established data centres such as DCI Indonesia, Princeton DG and NTT Communication, according to the annual report.

"As the internet penetration worldwide is growing rapidly, the data centre business is becoming a hot asset to invest in, including in Indonesia," Reza said.

Global investors' demand for infrastructure assets such as data centres across Southeast Asia have grown in recent years, amid the region's growth prospects and the sector's stable and long-term returns.

In September, global investment firm KKR & Co acquired a 20% stake in Singapore Telecommunications' regional data centre business for S$1.1 billion ($818 million).

($1 = 1.3450 Singapore dollars)

(Reporting by Yantoultra Ngui in Singapore; Editing by Kane Wu and Himani Sarkar)