Singapore’s ST Telemedia in $350M Philippine Data Centre JV with Globe, Ayala

State-backed ST Telemedia Global Data Centres has formed a $350 million joint venture with Ayala Corp and its Globe telecom unit to develop data centres in the Philippines, joining a legion of Singapore-based investors entering the Southeast Asian nation’s emerging digital infrastructure market.

The digital infrastructure unit of Singapore’s ST Telemedia has agreed to buy a 40 percent stake in the data centre subsidiary of Globe, which in itself is a joint venture between Ayala and Singtel, with the goal of boosting the target company’s capacity by 100 megawatts over the medium to long term.

 “The Philippines is an underserved market with huge demand for data centre services,” Globe president and chief executive officer Ernest Cu said in a statement on Wednesday. “Together with STT GDC’s deep expertise and experience in developing, owning and operating data centres globally and Ayala’s significant business reach, relationships in the country and in the region, we believe that this JV will be well-positioned to become the leader in the data centre space in the Philippines.”

The ST Telemedia investment, which involves Ayala Corp taking up a 10 percent interest in the joint venture while Globe retains 50 percent, makes the Temasek Holdings-controlled operator the third Singaporean digital infrastructure provider to enter the Philippine data centre market within the last four months as foreign investors compete to serve Internet giants and the nation’s more than 75 million mobile data addicts.

Aiming for Market Dominance

Dubbed KarmanEdge, the new joint venture will develop, construct and operate data centres across the archipelago with a long-term goal of dominating the market by providing services both to local enterprises and global hyperscalers.

Under the terms of the deal, Globe will receive around $100 million in proceeds from the share sale, while ST Telemedia will inject up to another $90 million in the JV to fund business expansion. The partners said that KarmanEdge will also explore other funding options including equity, debt and asset sales to further fuel its quest for scale.

Globe, which had a market capitalisation of $8.7 billion as of 31 December, has been operating data centres since 2001 through its Innove Communications unit which also plans to raise its capacity to 45 megawatts. According to the company website, Globe has existing hosting facilities in the Manila’s Makati financial hub, in Cavite, south of the capital, and one each in the regional centres of Cebu and Davao.

“We are thrilled to partner with Globe as we expand our global data centre platform into the Philippines, further bolstering our strong presence within Asia. said Bruno Lopez, president and group CEO of ST Telemedia Global Data Centres. This venture will enhance our offerings to support enterprises as they grow their digital infrastructure in the Philippines and the wider APAC region.”

Regional Expansion

ST Telemedia’s Global Data Centres unit has been expanding aggressively since 2014, with the company already operating over 140 facilities across its home market, China, India, Indonesia, Japan, South Korea, Thailand and the UK before entering the Philippines.

Five months ago, the state-backed tech solutions provider gained its first foothold in Japan by teaming up with Australia’s Goodman to develop two facilities in Inzai City that are expected to provide up to 60MW of capacity and be worth around $2.9 billion when completed.

That venture in Asia’s second-largest economy was announced less than a month after ST Telemedia launched its first hyperscale facility in Thailand dubbed STT Bangkok 1. That Thai announcement followed soon after the Singapore firm’s entry into the Indonesian market in May of last year with plans to construct a new data centre campus in Jakarta with up to 72 megawatts in power capacity.

Emerging DC Market

ST Telemedia is entering the Philippines’ data centre market in pursuit of the opportunity to expand the country’s current capacity, which stood at just 42 megawatts spread across 20 colocation facilities as of September last year, said Harish Sridharan, practice head for data center at Arizton Advisory & Intelligence, a market research provider based in Chicago.

With supply low and demand from both local and global firms rising, Sridharan estimates the industry will post a compound annual growth rate of at least 11.4 percent from 2020 to 2026. The influx of foreign players into the Philippine data centre market is also pushing local players like Globe and its rival telecom giant PLDT to launch new facilities.

ST Telemedia’s entry comes after its fellow Singaporean operator SpaceDC announced last month that it would develop a 72 megawatt hyperscale campus in the east of Manila. In December, Singapore-based Digital Edge unveiled plans for a 10MW data centre outside of Manila in Laguna province through a joint venture with a local developer.

“The current capacity of the Philippines data center market is lower compared to its Southeast Asian peers, namely, Singapore, Indonesia, and Malaysia. Apart from Singapore, all the other countries witnessed strong growth in the past 2-3 years,” Sridharan said. “It is now time for the Philippines market to enter the radar.”