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Qatari telecommunications giant Ooredoo is borrowing 2 billion Qatari riyals ($550 million) to expand its regional network of information centers because the natural gas-rich Gulf state seeks to capitalize on the cyber web that runs through the Middle East.
Ooredoo is majority owned by the Qatari government but is publicly listed and independently managed. Its data center subsidiary, Mena Digital Hub, has secured a 10-year financing line from three Qatari banks and plans to refurbish and expand its data centers to fulfill demand for artificial intelligence applications.
Fossil fuel-exporting Gulf states are betting heavily on AI to diversify their hydrocarbon-dependent economies, believing it might provide the low cost electricity needed to run the energy-hungry computer warehouses that process vast amounts of information for AI applications.
Analysts expect Saudi Arabia, the Gulf region's largest economy, and the technology-focused United Arab Emirates to turn out to be the biggest markets for data centers and AI.
But Ooredoo also has big ambitions: Over the subsequent five years, the corporate plans to construct 120 MW of information center capability. That's about half of the region's current market of 237 MW, in keeping with data from international real estate firm Cushman & Wakefield. The company expects that figure to greater than double to 537 MW by 2029.
In June, Ooredoo entered right into a partnership with US semiconductor manufacturer Nvidia, which produces chips that will be utilized in data centers to handle the large computing power demands of artificial intelligence.
In the Gulf, “there’s probably room for 3 to 4 major players,” Ooredoo CEO Aziz Aluthman Fakhroo told the Financial Times. “We hope to be one in all them.”
Aside from low cost energy and undeveloped land, the Gulf can also be a very attractive marketplace for computer warehouses because regulators require local data to be processed within the country.
“We have already got 26 data centers (in Ooredoo's key markets) and we’re expanding,” said Fakhroo, adding that “30 percent of the world's connectivity flows through the region.”
Ooredoo has data centers in Qatar, Kuwait, Iraq, Oman and Tunisia, in addition to Indonesia under the management of Indosat Ooredoo Hutchison.
But constructing data centers can take a protracted time. From obtaining regulatory approvals to sourcing the equipment needed to equip them, Fakhroo says it takes between 18 and 24 months to finish an information center: “It's an excellent problem to have, nevertheless it's still an issue. I can't deliver them fast enough.”
Aside from competing for coveted AI processors, the US has put the Gulf states on an inventory of regions that require a license to export the cutting-edge technology, fearing information could leak to rival China.
Fakhroo said Ooredoo's data center business in Indonesia has already received Nvidia chips and that within the Middle East it’s “attempting to receive the primary batch of chips by the tip of this yr.”
Access to US-made AI chips is only one example of why the Gulf states have found themselves caught within the crossfire of trade and technology competition between Washington and Beijing.
For Ooredoo, Fakhroo said, this meant keeping Chinese hardware out of information centers that provide Western firms. While Ooredoo still worked with Chinese company Huawei within the telecoms space, because its data center customers included Western cloud computing firms equivalent to Microsoft and Google, “they use Western technology, not Eastern technology.”
Analysts say regional telecom firms are betting on growth opportunities equivalent to constructing data centers because the expansion of their traditional businesses slows.
“It’s not that (data centers) will likely be the bread and butter of telecom firms,” said Ziad Itani, managing director of Arqaam Capital.
But “this can be a latest opportunity for growth,” he said. “At the identical time, you possibly can monetize your infrastructure,” since telecom operators have already got data centers.
Ooredoo has spun off the Mena Digital Hub and plans to speculate $1 billion in expanding its capabilities over the approaching years.
