SingTel Plans to Open Data Centers In Asia Targeting Outsourcing Firms
July 5, 2001
By Ilan Greenberg and H. Asher Bolande
Staff Reporters of The Wall Street Journal
Singapore Telecommunications Inc. will invest US$265 million over the next 18 months to open Internet data centers in cities throughout Asia. The new business, called Expan, will offer data-hosting services to corporations seeking to outsource the management of their Internet operations.
SingTel's investment in data centers comes as the sector experiences troubled times. Last week, one pan-Asian data center closed its Hong Kong operations amid weak demand, and the market research company International Data Corp. forecasts a 40% drop in the number of data-center companies operating in Asia within the next year. As a result, SingTel's move may pose a fresh challenge to existing independent data centers that operate without the financial backing or strategic benefit of a large telecommunications company.
Large telecom companies "are the ones that have an existing customer base. Migrating these customers to hosting services is not an easy task, but one that makes natural sense," said Jay Chang, an analyst with Credit Suisse First Boston (Hong Kong) Ltd. He said SingTel's Expan venture mirrors the successful trajectory of some U.S. telecom companies like AT&T Corp. and Qwest Communications International Inc.
With a similar strategy, Pacific Century CyberWorks Ltd. of Hong Kong and Telstra Corp. of Australia formed a pan-Asia data center venture in February. That raises the prospect that the Internet data-center sector may emerge as a new battlefield between the Telstra and CyberWorks alliance and SingTel, which are already rivals for pan-regional mobile-phone service.
In a speech Wednesday, SingTel's chief executive Lee Hsien Yang said companies in Asia are dissatisfied with the current crop of data centers and that SingTel's data centers will be "advanced and comprehensive." The centers initially will be opened in Singapore, Australia, Hong Kong and Osaka, Japan.
Write to Ilan Greenberg at ilan.greenberg@wsj.com and H. Asher Bolande at hyam.bolande@awsj.com |
