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Telcos, PE firms piling into Asian data centers

Asian data centers are on a massive building binge to feed AI and digital transformation.

Robert Clark

February 2, 2024

2 Min Read
(Source: Taylor Vick/Unsplash)

Asian data centers have started the new year at the same pace that they finished last year – hectic. Telcos and investment firms have unveiled a series of announcements and potential deals in the first weeks of 2024 as they position themselves for the coming AI boom.

In northeast and southeast Asia, the sector is expected to grow by 25% per annum to 2028, compared with 14% in the US, according to Cushman & Wakefield.

Expansion projects in Asian business hubs underway now will more than double existing capacity, Cushman & Wakefield said. As of August 2023, the top six cities in APAC (excluding China) had installed capacity of 3.65GW and had begun building another 4.8GW.

Besides AI, Asian markets are expecting plenty of upside from digital transformation and growth in consumer demand.

The biggest telco investor is NTT's data center subsidiary, which plans to spend 1.5 trillion Japanese yen (US$10.2 billion) on expansions and upgrades over the next five years.

NTT Global Data Centers has formed a JV with Japan's largest power company, Tepco, to take advantage of the utility’s energy management expertise. Their first project is a 50MW data center north-east of Tokyo and due to come into service by early 2026.

Keen PE firms

The other active telecom player is Singtel, which has just announced a plan to build a series of regional data centers with partners under a new brand Nxera.

The expansion, which Singtel has pitched as a means to drive AI development, is funded by the sale of a 20% stake in its data center business to KKR for 1.1 billion Singapore dollars (US$824 million) four months ago.

It is already building new facilities with Telkom and Medco Power in Indonesia and AIS and Gulf Energy in Thailand.

KKR's role in backing the Singtel rollout, meanwhile, underscores the keen interest from private equity, with major PE firms seeing data centers a reliable source of cash and growth.

KKR-Singtel is also among the potential investors in STT Global Data Centres (STT GDC), another Singapore firm controlled (like Singtel) by the state-owned sovereign fund Temasek. Seeking to raise funds ahead of a possible IPO, STT GDC has also shortlisted other PE heavyweights Apollo Global Management, Blackstone and Stonepeak, Bloomberg reports.

In Australia, Macquarie Asset Management and pension fund PSP Investments are reportedly preparing to put data center firm Air Trunk on the sale block.

The company, which has assets across Asia, could fetch as much as 12 billion Australian dollars ($7.9 billion) – a handy increment on the AU$3 billion ($1.95 billion) the owners paid for it in 2020.

At a time when markets are volatile and long-time favorites like China have cooled, the AI data center buildout looks like one of the best bets.

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About the Author(s)

Robert Clark

Contributing Editor, Special to Light Reading

Robert Clark is an independent technology editor and researcher based in Hong Kong. In addition to contributing to Light Reading, he also has his own blog,  Electric Speech (http://www.electricspeech.com). 

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