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Q1 2022: APAC Infrastructure Quarterly Report

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Executive Summary

The infrastructure services market in APAC entered the new year continuing on its current trajectory, but facing various headwinds. The economy and regulatory environment in China is slowing growth for the likes of Alibaba Cloud, supply chains are still creating challenges for operators and geopolitical factors are continuing to impact various sub-regions.

But against this backdrop, there is still widespread optimism about the region’s growth prospects. Capital is flowing into the sector at a steady pace and various joint ventures have been established to pursue new market opportunities. The joint venture is an increasingly popular model and has become a viable option for telcos that own data centre assets, but perhaps not the full complement of resources needed to make a competitive push. Just last year, it was looking like there would be a divestment wave coming from the telco sector. That momentum has stalled and it looks increasingly like many will remain in the business.

The Southeast Asia region is currently seeing a wave of activity as the next tier of markets emerge and Singapore’s challenges create overflow scenarios in nearby markets. Manila and Bangkok are set to become hyperscale markets and Johor has quickly emerged as a viable overflow option for demand that simply will not be served out of Singapore over the long-term.

Hyperscale remains the primary driver of growth in the region. But we are also starting to see subscale platforms expand in APAC, while the hyperscalers are building edge capacity. The AWS Local Zones product will enter the region this year and allow AWS to service markets that do not have localized infrastructure. It could be a prelude to future expansions, but one thing is for certain: AWS will consume large volumes of colocation to make this happen.

This report takes a closer look at the most noteworthy themes and developments that took place in the infrastructure services market in 1Q22. It is a regional supplement to Structure Research’s other quarterly update reports.