Building a digital home in the Philippines, one data centre at a time

“The infrastructure stage is a little slower than software,” smiled Carlo Malana, in reference to heightening digital infrastructure demand in the Philippines.

“Unfortunately, data centres can’t be built overnight and you have to be strategic because once you pour concrete in the ground, it’s very hard to remove.”

Speaking as CEO of STT GDC Philippines – Globe’s data centre joint venture partnership with ST Telemedia Global Data Centres (STT GDC) and parent Ayala Corporation – Malana is accelerating plans to lay digital foundations at pace in a country craving new technologies.

The aim? To supercharge business and accelerate economic activity… “we’re preparing for a future with digital as a driver, it’s not slowing down anytime soon.”

Why the Philippines?

In assessing the market landscape across Asia, regional data centre hubs have traditionally been located in Singapore and Hong Kong.

Singapore is running on empty with the nation significantly short on capacity while Hong Kong is feeling the geopolitical impact on business due to ongoing tensions between the US and China.

“The two main suppliers of digital infrastructure in the region have those situations to deal with,” Malana observed.

“If you look at the next wave of expansion, Singapore is full and Hong Kong is challenging for Western companies. So when you start putting all of these factors together, it makes sense that at some point, the market will look at an alternative.”

But even if both industry leaders bow out of such a competitive race, Manila-based Malana acknowledged that the rest of Southeast Asia remains. From that standpoint, STT GDC Philippines is “very bullish” on being an integral part of major expansion sites across the region, alongside Malaysia, Indonesia and even Thailand.

“The Philippines is definitely throwing its hat in the ring,” Malana said. “All of these countries have not gone as far as some of the more evolved nations in terms of digitalisation – these are nascent markets and more is to come.”

This part of ASEAN is still reliant on paper processes and remains dictated by “very archaic” ways of doing business.

“As generations of leadership evolve – running government departments and enterprise organisations – they are naturally more digital savvy and there’s simply more demand,” Malana outlined. “There’s a willingness to embrace the cloud and to leverage technology to move away from less efficient ways of transacting business.”

Citing the meteoric rise of GCash – a Philippine mobile payments service owned and operated by Globe Fintech Innovations – Malana said that even manual cheques and cash is starting to “disappear” across the country.

This was partly due to an extended lockdown period stretching almost two years during COVID-19, with schools missing face-to-face classes for more than 18 months.

“The lockdowns were just so long,” Malana said. “That forced the whole country to look at digital as an alternative, whether for online shopping or digital currency.

“But as a country, Filipinos are addicted to their smartphones and always top social graphs of Spotify, Facebook and TikTok adoption – not only in terms of consumption but generation of content. Our internet usage is high.”

Don’t forget the benefits of scale as well.

“We’re the second most populous country in the region at 114 million, behind only Indonesia at 274 million,” Malana explained. “So we’re a little less than half but the other countries after us are smaller, such as Malaysia (34 million) and Thailand (72 million).

Social dynamics aside, increased investment is also underway in the submarine cable space with cables now being terminated and landed locally. For example, Globe activated the segment of the Philippine Domestic Submarine Cable Network (PDSCN) from Luzon to Mindanao in January 2024, billed as the longest underwater cable in the country.

“It’s starting to make sense,” Malana noted. “We’re also able to leverage the international and global perspective of STT GDC and our opinion is that it’s a matter of when and not if in the Philippines.”

Such intent was illustrated when the business unveiled plans to develop its largest and most interconnected carrier-neutral data centre in the Philippines in May 2023.

Under the banner of STT Fairview, the new data centre campus will comprise over 83,000 square metres of gross floor area across four buildings, offering a development potential of 124 megawatts (MW) of IT load capacity once fully built out.

Geographically speaking, the facility is “strategically positioned” within Quezon City with access to nearby substations, as well as critical telecommunications and transportation links plus logistics, business and industry hubs.

The new data centre campus will cater to both hyperscalers and enterprises, providing “flexible and scalable” low-latency colocation options that are also sustainably built and operated.

“This will be a matter of execution,” Malana stated. “It’s a well-known fact that one of the key risks in this market is the ability to execute plans due to a range of issues such as weather or government regulations.

“But we want to be known as the company that delivers what we promise. With STT Fairview, we took the industry by surprise by making the announcement at the ground-breaking – this wasn’t ceremonial it was an actual ground-breaking and the next day, the bulldozers were working on the campus.”

For Malana, this was the strongest statement of intent that STT GDC Philippines could make in the local market. Because after all, talk is cheap.

“One of the press actually asked me at the time whether this was typical,” he recalled. “It was viewed as a ceremonial event then out of nowhere we doubled the country’s entire capacity, then backed it up and started working on the project.”

Scaling up to service increased market demand

Since the unveiling, capacity was also expanded by a total 5.2MW across three existing data centres in Makati, Cavite and Quezon City. This is in addition to the construction of a second facility at the data centre campus in Cavite, bringing the total number of data centres to seven in the Philippines.

According to Malana, this is in response to “high market demand” and the continuing desire to digitally transform daily and business operations across the country.

“We received indication from the market that it was time for even heavier investment,” Malana said.

“Do I see 124MW of contracted demand today? No. But that’s why we’re building this in phases and initially starting with 20MW which is sizeable in itself and pretty much doubles our portfolio in terms of capacity.”

Aligned to a strategy of progressively building capabilities as market demand increases, STT GDC Philippines is operating against the backdrop of enhanced hyperscaler interest locally, notably from Amazon Web Services (AWS), Microsoft and Google Cloud. Most start as a point of presence, then move into local zones and expand into full-blown regions.

“We’re probably 2-3 years away from full-blown regions but we’re seeing that demand already,” Malana outlined. “We’ve seen other countries follow similar curves so we’re learning from those experiences to plan and time our strategy accordingly.”

As a result, Malana expects STT Fairview to arrive “at just the right time” to service the demands of the hyperscaler community while also building a dedicated digital ecosystem nationally to enhance local skills.

“Yes, a rising tide approach will help the whole industry but remember, each of the major players also have their turf to protect,” Malana advised. “No player wants to give up any advantage in terms of being able to offer cloud regions in our country.”

Driving a growing digital economy

According to Access Partnership research, the Philippines stands to unlock a “vast economic potential” of up to PHP5 trillion ($101.3 billion in USB) by 2030 through the “full utilisation” of digital technologies.

As outlined in the research – The Growing Digital Economy in the Philippines – technology applications such as e-commerce and mobile have also been projected to generate an annual economic value of up to PHP3.5 trillion ($69.9 billion in USD), accounting for approximately 69% of the nation’s anticipated digital opportunity.

Within this context, Malana said digital infrastructure emerges as a “critical building block” in powering the nation’s transformation journey to stimulate economic growth and nurture innovation.

“Every enterprise seems to have a cloud-first strategy now,” Malana observed. “But as leaders start to trust cloud the question shifts to, where is your cloud?

“Businesses are definitely embracing cloud but they also want to stay local. A few years ago, the talk was about sending our data out of the country because there wasn’t enough digital infrastructure here.”

Accelerated by the rise of artificial intelligence (AI) and machine learning (ML), Malana said organisations are starting to understand the compute power required to supercharge such technologies.

“Businesses are storing a lot of unstructured data,” he said. “Before it was only a few gigabytes here and there but now it’s terabytes and even petabytes of information. Are you going to put that in a cloud in Singapore? Does that really make sense as a business decision?”

Prior to STT GDC Philippines, Malana served as CIO of the Globe Group, a digital solutions platform housing more than 54 million mobile and 3.5 million home broadband customers.

With over 20 years experience in telecommunications across the US, Mexico, and the Philippines, Malana has led both technology and business organisations across strategy, program management, merger integration, retail, finance, customer operations and sales.

“We founded this business with the understanding of serving the customer best,” Malana said. “We’ve been operating data centres in the Philippines for over two decades so we definitely will leverage that, plus the global strengths and design principles of STT GDC.”