Japan’s NTT Said in Talks to Buy Stake in Philippines’ PLDT Data Centres for $750M

Philippine telco giant PLDT, is said to be in talks to sell nearly a half stake in its data centre business to Japanese telecom group NTT in a deal that would potentially value the digital infrastructure unit at $750 million, according to Reuters.

Citing people familiar with the matter, the financial newswire on Tuesday reported that PLDT is in talks for the sale of up to 49 percent of its data centre business to NTT, with the Philippine telco’s digital infrastructure capable of a combined 99.5MW of capacity, including a 50 MW facility set to go live in July.

PLDT currently ranks as the Philippines largest data centre operator by capacity, and should NTT move forward with an acquisition, it would the Japanese giant’s latest expansion of its Asia footprint following projects in Thailand, India and Malaysia. NTT already owns 20 percent of the telecom operator’s ePLDT digital division, which controls its data centre business.

Long overlooked by global investors, the Philippines’ young population and hunger for digital services placed in ninth among Asia Pacific data centre markets in a study by Cushman & Wakefield published earlier this year, with the country’s Department of Information and Communications Technology (DICT) predicting in mid-2023 that data centre capacity in the island nation would grow fivefold by 2025.

Cementing Leadership

PLDT’s near-100MW capacity is spread across 11 data centres owned by ePLDT. Half of that power is scheduled to go live when its Vitro Santa Rosa facility in Laguna province becomes operational in July.

The company has billed the 4,500-rack centre southeast of Manila as the Philippines’ first true hyperscale centre. In its annual report in March, PLDT said the project, which ranks as the Philippines’ largest, will cement the company’s “leadership in the local data center market and the country’s regional competitiveness.”

The deal with NTT is being reported just one month after PLDT announced that it was establishing its data centre operations as a separate business named Vitro, under its ePLDT unit. That business held a 65 percent share of the Philippines’ data centre market as of March.

In June of last year, PLDT announced plans to build a 12th data centre with the 100MW project set to more than double its existing portfolio.

“We want to be able to help the Philippines be the next hyperscaler hub of Asia while continuing to support the digital transformation journey of different sectors locally. That’s why we’ve been investing heavily in our ecosystem,” ePLDT president and chief executive Victor Genuino said at that time.

Aside from the Laguna facility, Vitro has operational facilities in Makati and Paranaque City in Manila, Clark in Pampanga province, and Cebu City, a major metropolis south of the capital.

The existing facilities primarily cater to companies in the banking and finance, real estate, electronics and manufacturing sectors, as handling national government accounts, based on company records.

The report of NTT’s potential investment comes more than two years after PLDT, which is controlled by Filipino tycoon Filipino tycoon Manny V Pangilinan’s First Pacific, was said to be in talks to sell its data centre business for $500 million.

While PLDT declined to comment on this latest report, the firm last year agreed to sell and lease back 1,012 cell towers to KKR-backed telecom infrastructure firm Frontier Tower Associates in a $220 million deal.

Southeast Asia Expansion

While NTT had not responded to Mingtiandi queries by the time of publication, acquiring a stake in the Philippine data centre business aligns with the company’s expansion in Southeast Asia.

Last year, NTT launched a 12MW Bangkok facility as its third location in Thailand and opened a sixth facility in Malaysia’s Cyberjaya.

The group is currently the third largest data centre provider in the world with 100 facilities across 30 cities. In a report released in October, NTT Data, the firm’s IT services division said it aimed to deploy at least JPY 350 billion (now $2.25 billion) to boost its data centre portfolio during the 12 months ending March this year.

“The data center business is expected to continue to grow over the long term, and we will be aggressively investing in this business while maintaining sound financial health,” the company said.