Asia’s digital infrastructure market is in for a major shake-up

Waves of divestment by operators across Asia have paved the way for a major reorganisation of the roles and relationships that comprise the digital infrastructure value chain. 

Mobile operators in particular have been spinning off their tower assets and repositioning themselves in a changing industry. This reiterates the investment philosophy that network operators should seek to build assets early in the development cycle but then move to outsourcing those elements of network infrastructure where the technology is mature, and demand risk is low. The towercos have therefore largely taken over the tower infrastructure network, but they remain primarily focused on passive infrastructure, leaving active networks and data centres to other players in the value chain. 

Network operators are now turning to other parts of the digital infrastructure value chain, in anticipation of their own changing needs and that of the ecosystem in which they operate. For instance, subsea cables are increasingly recognised as a critically important part of the global telecoms landscape: the rapid growth in AI take-up is fuelling a need for massively expanded data transport capability, and one unfortunate incident with a ship’s anchor can cause an outage that paralyses a link for days or even weeks. The enormous economic and human impacts of such outages mean that operators are joining other players in embracing the opportunity to improve the capacity and resilience of undersea cable networks even on routes that are already well established. The Red Sea corridor’s strategic importance as an East-West nexus has made it a high-capacity conduit already, but there is more to come.

Similarly, some operators are increasing their investment in data-centre facilities both to meet their own corporate requirements, but also to tap into the huge global demand for data-centre capacity, accelerated by AI adoption. The Middle East’s position as an internet exchange point (IXP) makes it an attractive location for data centres as well as a landing point for subsea cables. Other parts of Asia will be especially well placed to meet the needs of AI-focused data centres which require high intensity of computing power as well as reliable (clean) power supplies and emerging technologies for cooling systems. 

Some operators are already well advanced with their plans to diversify across the value chain, but the next few years will see a substantial increase in investment in such assets.