‘There will be consolidation in the data centre industry’ – The Hindu BusinessLine

Clipped from: https://www.thehindubusinessline.com/info-tech/there-will-be-consolidation-in-the-data-centre-industry/article65398374.ece

Sharad Sanghi, Managing Director, NTT India 

Sharad Sanghi, Managing Director, NTT India 

NTT India MD Sharad Sanghi on the future of the data centre business in India and beyond

Tokyo-headquartered NTT in 2020 announced an investment of $2 billion to set up six data centres in India over four years. Last week, the company inaugurated a ‘hyperscale’ data centre campus at Mahape in Navi Mumbai, while another bigger center is under construction in Airoli. Its campus at Chandivali in Mumbai is India’s first operational hyperscale data centre, the company says.

In an interview with BusinessLine, NTT India MD Sharad Sanghi shares plans for securing additional investments, adding more data centres in tier-II cities and the consolidation of market players in the long term. Edited excerpts:

NTT in 2020 had earmarked $2 billion for data centres in India. With the increasing demand due to data localisation norms, is NTT planning to increase investment and the number of data centres?

We are on track with what we had committed. We are building six hyperscale data centre parks — three in Mumbai and the rest in Chennai, Noida and Bangalore. With the demand we are seeing, we are formally looking to launch data centres in a few tier-II cities as well. We are also investing in MIST [Myanmar/Malaysia, India, Singapore Transit] cable and renewable energy with multiple partners to achieve our objective of turning carbon neutral by 2030.

There will also be an additional investment that we will announce soon.

  The Union budget this year proposed grant of infra status to data centres and eligibility for funding. Has there been an uptick in data centre projects in India?

Data centre projects have seen an uptick and a lot of global players have entered. This is due to the huge demand. It has been accelerated by the data localisation policies under works and the government’s favourable stance towards data centres, whether giving them infrastructure status or, hopefully in the future, essential services status, modifying the building code and giving benefits like team distribution licences and making it easier to interconnect with fibres.

Fundamentally, data centre demand was strong even before Covid, but this has accelerated, leading to policies at both central and state government levels.

Real estate players, too, are getting into the data centre business. Will this be a challenge?

The demand is so robust right now, and it is not just a real estate play. It demands expertise in design, operations and managed services in IT, which few players have. And the demand, now and in the near future, will outweigh supply.

Yes, there will be some pricing pressure as new players trying to establish themselves will cut prices for anchor tenants. Earlier there were fewer players and clients had fewer options. But, eventually, I believe there will be consolidation in the market as there are few large customers and they will choose a few providers. Not everyone will necessarily benefit from those clients. In the short term, there will be pricing pressure and in the long term there will be consolidation.

The demand continues to be substantial. Per GDP penetration of data centres in India is still a fraction of China’s. For the next five years at least, no matter how many players come in, the scope is huge. The advantage NTT has is that it is among the top three companies in the world for building data centres. We have 25-plus years of track record of running these.

How will edge computing integrate into the larger plans?

We have developed a technology called software-defined data centre interconnect. We will be interconnecting all the data centres across the country. When we set up data centres in tier-II and tier-III cities, we will not only ensure they are carrier-neutral but will also provide data centre interconnect service, which can be connected with the core data centres.

With the advent of 5G and other connectivity offerings in India soon, we will see a lot of growth in these offerings.

NTT was exploring multi-year contracts with client companies to manage private 5G networks. What will NTT offer in 5G services? Are contracts in place?

NTT has invested and provided 5G network services in the rest of the world. In India, we are awaiting 5G spectrum auction. We do have some licensed spectrum through our partners across the world that can be used to deploy services in India. But we are watching [to see] what the final policy is from DoT before we aggressively deploy.

What is the outlook for NTT’s data centre business in the next 2-3 years? 

For NTT, India is the fastest growing market in the world. NTT has divided its worldwide presence into four regions: US, Europe, Asia and India. India has been given a separate hub status. It has been treated at par with other regions. The growth in India, too, is similar to markets like Europe and the US. 

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