S'pore firm bets $2.3b on Asia-Pac data centres

A Singaporean start-up is betting US$1.7 billion (S$2.3 billion) on becoming the digital landlord for tech giants building cloud services across Asia and Australia.

AirTrunk plans to build data centres in Australia's biggest cities of Sydney and Melbourne, with an anchor tenant already signed up as it targets undercutting rivals with lower prices. In the coming months, it will sign deals to expand into Singapore and Hong Kong.

Demand for cloud computing is surging as businesses that once ran their technology in-house shift processing power off-site so it can be accessed through the Internet.

AirTrunk predicts the Asia-Pacific market for data centre capacity will be worth US$12.5 billion (S$16.8 billion) by 2019, and it is banking on new cooling and electricity delivery systems, giving it an edge over giants such as Telstra and NTT Communications.

"Cloud computing in the Asia-Pacific is probably about three to four years behind the United States, but there is a massive catch-up, so cloud operators are investing significant money," AirTrunk founder Robin Khuda said in an interview. "Right now, there's an enormous shift to the cloud."

Companies such as Amazon spend billions of dollars to build or rent super-cooled, server-filled warehouses. These, in turn, run the Internet, delivering everything from cat videos to commerce.

Facebook, Google, Amazon and Microsoft alone will spend US$30 billion in capital this year - a 27 per cent increase from last year, according to Bloomberg Intelligence.

AirTrunk's business model is founded on building halls that it rents out to cloud service providers. It creates a secure space, Internet connections, electricity and cooling systems while customers install and control their own racks filled with servers, paying for their power and space.

The company is investing A$1.2 billion (S$1.3 billion) in Australia over the next three to four years, with about A$350 million coming within the next 12 months, Mr Khuda said.

Future facilities in Hong Kong and Singapore would cost about A$1 billion to build.

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A version of this article appeared in the print edition of The Straits Times on July 16, 2016, with the headline 'S'pore firm bets $2.3b on Asia-Pac data centres'. Print Edition | Subscribe