NTT Invests In Thai Data Centre


Japan's NTT Communications has agreed to acquire a 74% stake in Thailand's Digital Port Asia Limited , a local data centre provider. The investment is part of an ongoing acquisition strategy from NTT that saw it acquire holdings in the UK, Philippines and India in its 2012 financial year (ended March 31 2013). With the company seeing the strongest growth in cloud computing platforms revenues in FY2012, its decision to pursue data centre expansion should build long term revenue growth. BMI believes cloud computing has strong potential in emerging markets and NTT is positioning itself to be a major international player.

Continuing Potential
Thai Cloud Computing Forecasts

NTT reports that it generated JPY99bn in FY2012 from its cloud computing platforms division, an increase of 17.9% y-o-y. The applications and content division saw 4.9% growth but the combined increases from the two units were insufficient to offset declining revenues from its other divisions. Although cloud computing offers fast growth, it contributes a comparatively small amount to NTT's overall performance.

Acquisitions offer the chance for NTT to grow quickly in the cloud computing and data centre space. The company announced its Global Cloud Vision in October 2011 and has expanded the reach of its data centres quickly since then. In Thailand, cloud computing and data centre capacity demand is expected to grow quickly over our forecast period and form a significant chunk of the market's IT services segment.

Digital Port offers a 9,600m 2 facility which, crucially, is in a 'flood-free location'. After the devastating floods in 2011, which took several IT manufacturing facilities offline, ensuring business continuity practice is a higher priority for companies in Thailand. Digital Port will open a new data centre in June 2014 in the Amata Industrial Park in Bangkok, offering access to major local and international businesses. This will join NTT's existing portfolio of 140 data centres, and build on the revenue potential the company has already identified for data storage and cloud computing products.

NTT's ambitions for cloud computing and data centre growth make it a good partner for Digital Port, giving the latter access to a global network of data centres that should make its services appeal to major international and internationally-focused businesses located in Thailand. International investment in data centres will also provide an additional boost to IT service growth in Thailand. BMI believes the cost savings offered by storing data and services in the cloud will appeal to companies in emerging markets, encouraging greater investment in cloud facilities in new markets and benefitting local businesses.

NTT Communications Revenues By Division (JPYbn)
FY2011 FY2012 % Growth FY2013f % Growth
f = NTT Communications Forecast. Source: NTT Communications. Data are for NTT Communications Group after adjustments and elimination of intra-group transactions.
Cloud Computing Platforms 84 99 17.9 130 31.3
Data Networks 430 427 -0.7 428 0.2
Voice Communications 352 320 -9.1 296 -7.5
Applications And Content 103 108 4.9 116 7.4
Solution Services 223 223 0.0 241 8.1
Group Operating Revenues 1,213 1,195 -1.5 1,225 2.5
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Geography: Thailand