451 Research, a unit of S&P Global Market Intelligence, has unveiled findings indicating a projected compound annual growth rate (CAGR) of 10-25% in data center capacity across Malaysia, Indonesia, and India over the next five years. These countries share several advantageous characteristics, including a growing online presence, locally tailored content, and a youthful demographic.
In contrast, Singapore is expected to experience more modest growth due to its well-established market, constrained by limitations in land availability and power supply. Nonetheless, regional telecom operators, real estate firms, and international data center providers are actively pursuing opportunities in South and Southeast Asia, seeking to diversify their revenue streams and assets while retaining customer bases.
S&P highlights that telecom companies in South and Southeast Asia view data center investments as a natural extension of their core operations. They leverage their existing connectivity infrastructure and experience in managing capital-intensive enterprises within regulated environments. An illustrative example is the Philippines-based telecom provider PLDT, currently constructing its 11th data center with a 36-megawatt capacity in Laguna, which will more than double its current 28MW capacity upon completion.
Additionally, Singtel is strategically expanding its data center footprint in Singapore, Indonesia, and Thailand through various partnerships, with a goal to increase its total data capacity to 155MW by 2026, up from the current 60MW. Telcos recognize data centers as a means to offset declining growth in traditional voice and mobile services, especially in anticipation of the gradual ramp-up of 5G revenue.
In the long term, S&P emphasizes that data centers present monetization opportunities for telcos, allowing them to recycle capital and invest in emerging prospects. Data centers situated favorably, equipped with robust network connectivity and high capacity utilization, can command significant value and premium price multiples.
