Major undertaking: Satya speaks at an event titled “Microsoft Build: AI Day” in Jakarta. The Microsoft CEO said the company would invest US$1.7bil over the next four years in new cloud and AI infrastructure in Indonesia. — AP
JAKARTA: State-owned telecom company PT Telkom Indonesia is seeking to rapidly expand its data centre business in a bid to capitalise on the surging demand for data storage, particularly that driven by artificial intelligence (AI) development.
Through the group’s subsidiary PT Telkom Data Ekosistem (TDE), also known as NeutraDC, Telkom aims to increase its data centre capacity to 500 megawatts (MW), both domestically and internationally, by 2030.
That would mark an over eight-fold increase from its current capacity of 60 MW.
“Most of our expansion plans involve adding capacity. We build, invest and then make it available for ready-to-use,” Telkom Group business development director Honesti Basyir told reporters at NeutraDC headquarters in Singapore last Friday.
“We also have a regional expansion plan, as many countries need data centres but they don’t have the capacity and competence.
“However, we have to prove ourselves first in Singapore,” Honesti added.
He indicated that international growth might involve strategic acquisitions rather than starting from scratch due to differing regulations.
“We’re talking in parallel with other countries,” he said, without disclosing any names.
NeutraDC chief executive officer Andreuw Thonilus Albert said of the ambitious target: “If this business grows faster, we might push towards 700 MW.”
Momentum for data centre investments is growing rapidly in South-East Asia, following a similar trajectory to that seen in the United States and Europe with tech giants rapidly expanding their AI and cloud capabilities.
Microsoft CEO Satya Nadella visited Indonesia and pledged to invest US$1.7bil in the country last month in AI, cloud services and nurturing digital talent over the next four years.
Previously, Nvidia also announced to build a US$200mil AI centre amid a push into South-East Asia.
The total data centre market in Asia Pacific is estimated to reach 23,200MW by 2029, marking a compound annual growth rate (CAGR) of 10.21% from 14,270MW this year, according to data from Mordor Intelligence.
Meanwhile, Generative AI is poised to significantly transform the data centre industry, either in terms of numbers and locations, according to property consultancy Jones Lang Lasalle’s report in January.
Given the high demand, it is expected that development will continue at a rapid pace this year.
Singapore is projected to lead with the way with over 880MW of the data centre market in Asean this year, according to Mordor Intelligence.
This surpasses Indonesia’s 650MW this year.
NeutraDC’s Andreuw defended Telkom’s recent expansion, and said that it was not too late, especially after Singapore only moved to lift its moratorium on new data centres last year, which had been in place since 2018.
He added that Telkom had only pivoted towards the data centre business in earnest in 2022, but that was because the company had been focusing on its telecom business.
Telkom would take the opportunity to position itself in Batam to use the advantage of the overflow from Singapore, making it a win-win solution, he said.
“Indonesia remains with significant potential for data centres because of the large workload expected,” Andreuw said.
Telkom, Indonesia’s largest telecom group, currently has 32 data centres, which includes 27 at home and five overseas, according to its 2023 annual report.
In 2024, the company anticipates significant growth in the cloud and business-to-business information technology (IT) services sectors, projecting 27% and 7% CAGRs, respectively.
In the first quarter of this year, the group’s data centre and cloud business was marked by A 24.6 year-on-year revenue increase, posting revenue of 449 billion rupiah (US$27.5mil).
“We believe we can achieve one trillion rupiah in revenue this year, as we are adding capacity and attracting new, high-quality tenants,” Honesti said.
Telkom in March, consolidated its data centre business under NeutraDC, including those previously owned by Telin Singapore Data Centre. Telkom also injected 1.6 trillion rupiah into NeutraDC on June 4, according to a disclosure released last Friday.
This will aid the ongoing development of a hyperscale data centre in Cikarang, West Java, which will see an additional IT load capacity of 18MW on top of the existing capacity that currently stands at 42MW.
While Singapore remains the leading market for data centres in the region, experts said that Jakarta could attract rapid migration of centre investments, by showcasing three things: good data governance, strict data protection enforcement and robust supporting infrastructure.
“If a company wants to attract foreign investors, one of the most frequently asked questions is whether Indonesia has strong data laws,” K&K Advocates partner Danny Kobarata told The Jakarta Post last Friday.
Foreign investors remain sceptical due to current gaps in Indonesia’s data protection law and poor enforcement, which has led to them looking to neighbours like Malaysia’s Johor state.
Indonesia’s data protection law was passed in 2022, but it will only be implemented in October this year.
“Having abundant energy resources is useless if data governance remains poor and there’s no guarantee of supporting infrastructure,” he added.
Straits Interactive chief marketing officer Alvin Toh said companies should showcase compliance with international standards by voluntarily benchmarking against international standards of data protection, such as through self-audits and exceeding compliance requirements. — The Jakarta Post/ANN
