How STT GDC is cracking the Philippines datacentre market

With its rising digital adoption, submarine cable investments, access to renewable energy and strategic location, the Philippines is poised to capitalise on the growing demand for datacentre services in the country and the broader Asia-Pacific region.

The Philippines’ thriving digital economy has already drawn interest from hyperscalers such as Amazon Web Services, which has established a Local Zone in Manila, and Alibaba Cloud, which operates a datacentre in the capital.

Datacentre operators are eyeing the underserved market as well. In 2022, Singapore-based ST Telemedia Global Data Centres (STT GDC), Filipino telco giant Globe and Ayala Corporation, one of the largest conglomerates in the Philippines, formed a $350m joint venture, STT GDC Philippines, to build and operate datacentres in the island-nation.

In an interview with Computer Weekly, Carlo Malana, CEO of STT GDC Philippines, outlined the dynamics of the local datacentre market and the company’s strategy to address the needs of hyperscalers and enterprises. Malana also talked about how his previous role as CIO of Globe has helped with executing the company’s strategy.

Tell us more about STT GDC Philippines and how it is positioning itself in the country’s datacentre market

Malana: We’re in a stage where we’re now positioned to provide services in the Philippines, which has been underserved for so long. We’re one of the largest operators in the country for datacentres because of the assets we inherited through the joint venture.

We operate five datacentres in the Philippines – three in Metro Manila, one just south of the metro in Cavite and one in Davao in the southern Philippines. We provide 22MW of IT load, and that’s significant in the Philippines, which has about 60MW of capacity that caters primarily to enterprise customers today.

In Southeast Asia, the traditional hubs have been Singapore and Hong Kong, which are centres for connectivity and datacentre colocation. You’re probably aware of Singapore’s challenge in terms of power and land limitations to support the growth in digital infrastructure, so that market is getting saturated and companies hosted there are looking for room to expand.

Western companies hosted in Hong Kong are also looking to expand elsewhere, so that’s a great opportunity for the Philippines, which has become quite an interconnected country in terms of submarine cable landings and investments, along with opportunities to tap renewable energy sources. That makes the Philippines the perfect spot for datacentres, which will not only serve the second largest population in ASEAN, but also other countries with growing digital infrastructure requirements.

“Every market has its own idiosyncrasies, and you need to go through a learning curve to be successful. My time at Globe has helped me to leverage those learnings so we can deliver what we are promising in a very competitive field”

Our goal is to serve this market in a meaningful manner at a time when digital adoption is growing among Filipino consumers and businesses, driving demand for compute and storage. There’s no question that demand will continue to grow, and you will still need a place to secure, power and cool the computers that are doing the work.

How are the dynamics of the Philippines’ datacentre market shaping your go-to-market strategy, particularly in the enterprise market where more companies are looking to reduce their datacentre footprint and move more workloads to the public cloud, even as some are thinking of repatriating public cloud workloads to private cloud infrastructure that could be hosted by STT GDC?

Malana: Digital adoption in the Philippines has been jumpstarted by the pandemic with things like e-wallets and e-commerce, but it’s still nascent. The market hasn’t reached saturation point and there’s a lot of opportunity for growth. In fact, we recently announced that we’re building our largest carrier-neutral and most interconnected datacentre in the Philippines that will deliver 124MW of capacity. That’s six times what we currently have.

But our strategy isn’t going to be fully focused on enterprises because we don’t see their datacentre requirements growing six times. Most of them are going to public cloud, so this new facility is primarily targeted at hyperscalers.

Still, that doesn’t preclude us from serving enterprises that deploy private clouds after they discover certain costs in public cloud pricing that they don’t want to pay. These companies may also have legacy applications that they’re not ready to get rid of, so there’s still going to be a requirement for datacentres and colocation space. The type of space they’re looking for is also going to be interesting. In the past, their transactions have traditionally been batched, so there’s some headroom with respect to availability numbers, where you can take the application down and bring it up later in the night.

But as these legacy applications become part of a digitisation strategy, they will need to support higher availability demands. That can’t be fulfilled with datacentres that were designed for older applications. And so, as enterprises look at those facilities that need to be refreshed from a technology standpoint, it becomes attractive to put their applications in a facility that’s purpose-built and can support the higher availability requirements.

There’s a general consensus that datacentre providers are going beyond offering colocation services – they increasingly see themselves as technology platforms that offer a slew of services, such as direct connections to hyperscalers, that underpin their customers’ digital operations. What are your thoughts on that?

Malana: The industry will evolve. But we got to start from the basics. To be a trusted technology partner, you have to earn your share by doing what your basic functions are, that is, to host systems and take care of things like security and power. You’ve got to keep everything running and uphold your service levels.

On one hand, the mission of a datacentre is not hard or complex – you can articulate it in terms of keeping servers running as close as possible to 100% uptime, but at the same time, you know that at some point you will need to provide additional value because some customers will look for that.

An example is liquid cooling. There have been talks for some time about using servers with more efficient liquid cooling or direct liquid cooling, but they haven’t been adopted widely, at least by the major hyperscalers. And so, the hyperscalers have continued to colocate the more traditional type of servers that don’t have direct liquid cooling.

Now, is there an opportunity for datacentre operators to spur that development by creating a service that supports those sorts of servers for certain workloads? Yes, I think so, and that might be an area where we might become a technology platform and expand our stack.

The other balancing act is that it’s not really a great strategy to be competing with your customers, especially your big customers. And so, we’d like to ensure that we get the stuff done and we’re really focused on what our hyperscaler customers are looking to do while also addressing a certain subset of the market which has been ignored and may not be fully developed.

When we think about datacentres, we often think about sprawling facilities for companies to host their IT equipment. What’s the thinking around edge datacentres that are smaller in scale but closer to where the workloads of your customers are?

Malana: The definition of edge is quite interesting. Is the edge already where you have datacentres outside of your major hubs? Because if you think about the expansion strategy outside of Singapore and Hong Kong, you are kind of at the edge when you are colocating in a datacentre in the Philippines.

“Our strategy isn't going to be fully focused on enterprises because we don't see their datacentre requirements growing six times. Most of them are going to public cloud, so this new facility is primarily targeted at hyperscalers”

But is that edge enough for you when you’re putting hyperscale datacentres in the Philippines? Or are you saying that within Metro Manila, you’d like to have datacentres of a smaller scale in your block? I think that as applications start to require lower latencies, there might be a need for edge datacentres at some point in the future.

Seeing where we are in the Philippines right now in terms of redundancy of connectivity, when you talk about edge, it’s really about where the traffic is. Today, most traffic and commerce in the Philippines is still around the metro areas. The infrastructure is still the most developed and most reliable in the metro areas, which we’ve chosen to focus on at this stage of our evolution.

After we get through the first waves, there may be a need to go beyond metro areas, but as with any high capital expenditure business, you’ve got to figure out when the market is ready to take advantage of those types of edge facilities. At this point in time, the case for edge is still not there.

It’ll come in the future, but probably not in the next three to five years. After that timeframe, we might start seeing applications that will require those types of low-latency capabilities, but again, that has evolved a little slower in this part of the world. But as we start seeing adoption ramp up, we’ll be positioned to take advantage of that and change our strategy from operating large-scale datacentres to running more nimble and smaller facilities.

Well, you’d be in a good position when that happens by virtue of the fact that Globe is onboard, right? I mean, Globe owns the last-mile connectivity to the edge where consumers and businesses are

Malana: I don’t want to talk about that too much. But yes, it is an advantage to be a carrier-agnostic datacentre operator that’s still partly owned by one of the carriers.

Help us to understand the idea of being carrier neutral when Globe is one of the major shareholders in this joint venture. How do you manage to maintain that neutrality? Are you open to working with other network providers, like the NTTs of the world, that want to have a spot in your datacentres?

Malana: Absolutely. When we started the joint venture, one of the key mandates from Ernest Cu, the CEO of Globe, was that we’ve got to serve the market’s needs and make the market as large as possible.

A great example of this is one of Globe’s more successful investments in fintech, GCash, the mobile payments service. GCash became so successful because it was carrier-neutral and agnostic. It accepted customers from any carrier that wanted to sign up.

For us, a datacentre customer is going to require multiple carriers for redundancy. They’re looking for backups of backups and diverse routes, and one carrier can’t serve that. And by being carrier-neutral – and putting that into practice – we are able to focus on what our customers need. Those are the types of things we have to think about to ensure that our customers can use our services without any attachments to any of the legacy pieces.

You alluded to the availability of renewable energy sources as one of the advantages of being in the Philippines. Could you elaborate on your datacentre sustainability efforts?

Malana: All three of our shareholders are very focused on sustainability – Globe is very focused on its sustainability objectives, STT GDC also has a very aggressive sustainability goal, and so does Ayala, which, quite honestly, is one of the Philippines’ leading corporations in terms of sustainability initiatives.

Right now, we operate the majority of our datacentres with 100% renewable energy. There’s a small datacentre that’s not able eligible for that at this time, but we’re working to get that to 100%.

Our facilities also need to be designed from the ground up with sustainability in mind. We’re looking at things as basic as pouring concrete slabs and using recycled steel, not only to improve cooling efficiency, but also to increase our use of sustainable building materials.

We know air is not the most effective and efficient means to conduct heat, so we made sure our facilities are ready for liquid cooling. We’re starting to see demand for liquid cooling from customers that focus on artificial intelligence [AI] and machine learning. They’re also starting to use GPUs [graphics processing units] with very high rack densities in terms of power. It’s part of our strategy to ensure that we’re ready for those sorts of requirements.

The other thing that’s sometimes overlooked is the availability and readiness for AI which we can incorporate into the way we operate our datacentres. That will enable us to fine-tune datacentre operations, such as adjusting environmental conditions based on how many visitors are entering our halls, for example.

Last but not least, there are certifications, such as the Leed and Uptime certifications, that we will be pursuing for our properties. This will make sure we’re meeting global standards from a sustainability perspective.

You were the CIO of Globe previously – how has that experience been beneficial to your new role as CEO of STT GDC Philippines?

Malana: Understanding how datacentre infrastructure is being utilised has provided me with insight into what our customers are really looking for. Going from being one of the biggest customers of a hyperscaler in the region to becoming a provider of datacentre services helps me to understand both sides of the equation.

In addition, my experience at Globe, which has an interesting blend of global expertise and local knowledge, helps with executing our strategy in the Philippines. Every market has its own idiosyncrasies, and you need to go through a learning curve to be successful. My time at Globe has helped me to leverage those learnings so we can deliver what we are promising in a very competitive field.

Come 2025, more than half a dozen new players will be entering the market in the Philippines, based on the announcements so far. We want to stake our reputation as the company that delivers what we say we’re going to deliver and be a trusted partner that gives you actionable information.

More than just hearing about our plans, we have specific targets in terms of what we’re going to build. I think that’s going to be one of our competitive advantages in this market. While it seems easy to construct a building, building a datacentre is more than just building a shell. It’s going to require good design and a great team that knows how to operate these facilities day in and day out to provide the levels of service we’re promising our customers.