JAKARTA: PT Telkom Indonesia, a state-owned telecommunications company, is aggressively expanding its data center business to capitalize on the surging demand for data storage, especially driven by artificial intelligence (AI) development.
Through its subsidiary, PT Telkom Data Ekosistem (TDE), known as NeutraDC, Telkom aims to boost its data center capacity to 500 megawatts (MW) by 2030, both domestically and internationally. This represents an over eight-fold increase from its current 60 MW capacity.
“Most of our expansion plans involve adding capacity. We build, invest, and then make it available for use,” said Honesti Basyir, Telkom Group’s business development director, at NeutraDC’s headquarters in Singapore last Friday. He added that while regional expansion is crucial due to unmet needs in many countries, the company must first prove itself in Singapore. International growth might involve strategic acquisitions due to varying regulations.
NeutraDC CEO Andreuw Thonilus Albert suggested that if growth accelerates, they could push towards a 700 MW capacity. Data center investments are rapidly increasing in Southeast Asia, following trends seen in the U.S. and Europe where tech giants are expanding their AI and cloud capabilities.
Microsoft CEO Satya Nadella recently pledged a $1.7 billion investment in Indonesia over the next four years for AI, cloud services, and digital talent development. Nvidia also announced plans to build a $200 million AI center in Southeast Asia.
According to Mordor Intelligence, the Asia Pacific data center market is projected to reach 23,200 MW by 2029, with a compound annual growth rate (CAGR) of 10.21% from 14,270 MW this year. Generative AI is expected to significantly transform the data center industry, as noted by a January report from property consultancy Jones Lang Lasalle.
Singapore is anticipated to lead the ASEAN data center market this year with over 880 MW, surpassing Indonesia’s 650 MW. NeutraDC’s Andreuw defended Telkom’s recent expansion, noting that it isn’t too late, especially after Singapore lifted its moratorium on new data centers last year, which had been in place since 2018. Telkom shifted focus to the data center business in 2022 after prioritising its telecom operations.
Telkom plans to leverage Batam’s strategic position to benefit from Singapore’s overflow, seeing it as a win-win solution. “Indonesia has significant potential for data centers due to the large workload expected,” Andreuw said. Telkom, Indonesia’s largest telecom group, currently operates 32 data centers, including 27 domestic and five international sites, as per its 2023 annual report.
In 2024, Telkom anticipates substantial growth in cloud and business-to-business IT services, projecting 27% and 7% CAGRs, respectively. The first quarter saw a 24.6% year-on-year revenue increase in the group’s data center and cloud business, reaching 449 billion rupiah ($27.5 million). “We believe we can achieve one trillion rupiah in revenue this year by adding capacity and attracting high-quality tenants,” Honesti stated.
In March, Telkom consolidated its data center business under NeutraDC, including assets previously owned by Telin Singapore Data Centre. Telkom also injected 1.6 trillion rupiah into NeutraDC on June 4, supporting the development of a hyperscale data center in Cikarang, West Java, which will add 18 MW to the existing 42 MW capacity.
Despite Singapore being the regional leader in data centers, experts suggest Jakarta could attract significant investment by demonstrating good data governance, strict data protection enforcement, and robust infrastructure. “Foreign investors often question whether Indonesia has strong data laws,” said K&K Advocates partner Danny Kobarata. Indonesia’s data protection law, passed in 2022, will be implemented in October this year. Straits Interactive CMO Alvin Toh advised companies to showcase compliance with international standards through self-audits and exceeding compliance requirements. — The Jakarta Post/ANN
