To build or not to build: Dito weighs entry into data centers
It is becoming more and more tempting for Dennis Uy’s Dito Telecommunity Corp. to hop on the data center bandwagon, but it will likely do so only when it turns profitable.
Manila, Philippines — Dito Telecommunity Corp.'s CEO, Dennis Uy, is weighing the idea of entering the data center industry, but only when it proves profitable. Dito's Chief Revenue Officer, Adel Tamano, revealed that the telco is currently evaluating the business case for building data centers for enterprises and government clients.
The Philippines' data center industry gained a significant boost due to the issuance of Executive Order (EO) 119, which mandates government agencies to store sensitive information within the country. Companies like VITRO Inc. and ST Telemedia Global Data Centers (STT GDC) Philippines are set to benefit from this policy due to their existing infrastructure.
Dito already has data centers for its own needs, but Tamano stated that they could be expanded in the future, provided a strong business case is present. The primary reason Dito hesitates to build data centers is its ongoing financial struggle, with the company's parent, Dito CME Holdings Inc., experiencing an increase in net losses from P3.36 billion to P11.29 billion in the past year.
The telco's revenue grew by 21 percent, reaching P11.67 billion, while expenses increased by six percent to P17.41 billion. Higher interest payments and foreign exchange losses have further exacerbated Dito's financial woes. China Bank Capital Corp. managing director Juan Paolo Colet suggested that Dito should first achieve its financial targets, aiming for profitability by 2028, before entering the data center business.
According to property analyst Cushman & Wakefield, a data center in the Philippines costs at least $6.6 million, or approximately P405 million, per megawatt of capacity. While Dito acknowledges the capital-intensive nature of building a competitive data center, Tamano acknowledged that some may require even more substantial investments, particularly those designed for high-computing requirements like artificial intelligence (AI).
Nonetheless, Dito remains open to the opportunity of operating data centers. VITRO, a unit of PLDT, is expanding its operational capacity to 44 megawatts by the end of the year and 62.4 MW by 2027. Meanwhile, STT GDC Philippines, the data center arm of the Ayala Group, is also increasing its capacity to 30 MW this year, driven by the government's mandate for data residency.
Major tech companies such as Amazon, Google, and Meta rely on data centers for their applications and information, making these facilities vital and profitable in today's digital landscape. However, growing concerns are emerging regarding the environmental impact of data centers, particularly as the largest ones consume up to five million liters of water per day for cooling purposes.
Written by urgent.news from Philippine Star Business's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
