As the digital era continues to unfold, Asia Pacific (APAC) continues to be the powerhouse for data centers as it is expected to be the largest market worldwide, potentially overtaking the Americas. With this, we expect telcos to continue building more data centers as demand keeps growing. The potential of the data center business is apparent, with our regional peers undertaking data center expansion on a wider scale on the back of bigger transaction activities with hyperscalers like Amazon and Google. <\/p>\n\n\n\n
With this in mind, we see data centers as the next avenue of growth for our telcos and this underpins our BUY rating for PLDT (TEL, Target Price: P1,770.57), Globe Telecom (GLO, Target Price:: P2,689.32) and Converge ICT (CNVRG, Target Price: P20.58).<\/p>\n\n\n\n
Higher capacities, bigger opportunities<\/strong><\/p>\n\n\n\n As new technology is created, it can also consume higher amounts of data which translates to the need for higher capacities. As such, telcos have recently been announcing plans of new data centers with higher megawatt (MW) capacity. <\/p>\n\n\n\n GLO plans to sextuple its current 22-MW capacity with the addition of the 124-MW Fairview data center project. On the other hand, TEL has plans for a new data center project being \u2018no less than 100-MW\u2019 as stated by ePLDT\u2019s president. <\/p>\n\n\n\n Not to be left out, CNVRG is also planning to build two data centers with a total capacity of 13-MW in 2025. In our previous notes, we have said that these developments are to be expected as it is in-line with McKinsey & Company\u2019s forecasts on expanding data center capacity to meet the growing demand for AI.<\/p>\n\n\n\n Who leads the market? <\/strong><\/p>\n\n\n\n According to Cushman & Wakefield Research, Manila is the 9th largest market in the \u201cEmerging Markets\u201d category. Although far from the capacities of top players in the emerging market, the DICT expects the Philippines to reach around 300-MW by 2025. <\/p>\n\n\n\n For reference, the country\u2019s data center capacity was only around at 60-MW in 2023 but as of December 2024 the total data center capacity of just the PSEi-listed companies has already reached 132-MW – led by TEL (100-MW), followed by GLO (22-MW) and then CNVRG (10-MW).<\/p>\n\n\n\n The unfair advantage of the Philippines<\/strong><\/p>\n\n\n\n Albeit late to the data center race, the strategic location of the Philippines makes it an ideal hub for regional data centers with ease of connectivity to other countries and regions. To further build on this geographical advantage, our local telcos have continued to lay down subsea cables and improve fiber connectivity to ensure high speed and efficient connections to different data centers and networks, which should translate to better data center service.<\/p>\n\n\n\n