A new report from S&P Global Market Intelligence, specifically via its 451 Research, had revealed that Malaysia will see its data centre capacity growing at a compound annual growth rate (CAGR) of 10% to 25%. The larger continents of Indonesia and India will also experience similar CAGR increases.
He noted how all three countries “share some common attributes, such as still-growing pentration rates, an explosion of localised content, and a fast expanding youth population.
It’s notable how many large enterprises and small- and medium-sized enterprises (SMEs) that have already scaled are all looking to digitalise their operations and moving to the cloud.
The study also reported how regional telecoms, real estate companies, and data centre providers are keeping a close eye on Southeast Asia and South Asia as they believe both regions are prime for investment.
“(Beyond) being keen for a slice of the region’s (growth potential) in data centres, (investing into this region) is one of the ways to diversify revenue sources and assets; reinforce efforts to retain customers; and consider this region as suitable to run capital-intensive businesses in a highly regulated environment,” the report noted.
Investments into data centres, especially those that are located in favourable locations, have good network connectivity, and high-capacity utilisation are considerably high-valued, offer high-price multiples, and can drive monetisation opportunities that want to reinvest their capital into other emerging opportunities.
As is, some telcos with regional capabilities are looking to expand their data centre investments. The report cited Singtel and Philippines-based PLDT as key examples.
However, S&P also cautioned that there are risks with telc0-operated data centres as can be seen with US-based telcos that have exited this space.
“This is due to how they are unable to compete effectively against specialised providers. These are are not managed independently and may lack a dedicated sales force that (would likely) result in lower utilisation. (It must be mentioned that) they are seldom carrier-neutral and may lack inter-connection,” the report stated.
With growing interest in building data centres in Malaysia, such as Microsoft and Amazon Web Services, this report from the credit rating agency is aligned with current sentiments within the technology sector.
There are likely to be more announcements of new data centres opening up in Malaysia in the coming months, with some being designed to manage regional loads.