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Qatari telecoms company Ooredoo is borrowing 2 billion Qatari riyals ($550 million) to expand its regional data center network as the gas-rich Gulf nation seeks to tap into the information superhighway that runs across the Middle East.
Ooredoo is publicly traded and independently managed, although it is majority owned by the Qatari government. Its data centre subsidiary, Mena Digital Hub, has secured a 10-year financing facility from three Qatari banks and plans to refurbish and expand its data centre to meet the demand for AI applications.
Gulf states that export fossil fuels are investing heavily in AI to diversify their hydrocarbon-dependent economies, believing it can provide the cheap electricity needed to run energy-hungry computing warehouses that process vast amounts of data for AI use.
Analysts expect Saudi Arabia, the Gulf region’s largest economy, and the tech-centric United Arab Emirates to be the biggest markets for data centers and AI.
But Ooredoo also has big ambitions, and aims to build 120MW of data centre capacity in the next five years. That’s about half of the current 237MW market in the region, which is expected to more than double to 537MW by 2029, according to data from international real estate firm Cushman & Wakefield.
In June, Ooredoo partnered with Nvidia, a U.S. semiconductor manufacturer that produces chips that can be used to handle the massive computing demands of AI in data centers.
“There is probably room for three or four major players in the Gulf,” Aziz Aluthman Fakhroo, Ooredoo’s chief executive, told the Financial Times. “We want to be one of them.”
In addition to cheap power and vacant land, the Gulf region is a particularly attractive market for computing warehouses, as regulators require local data to be processed within the country.
“We already have 26 data centers. [in Ooredoo’s main markets] “We are expanding,” Fakhroo said, adding that “30% of the world’s connections flow over the Internet.” [the] region”.
Ooredoo has data centers in Indonesia, under Indosat Ooredoo Hutchison, as well as in Qatar, Kuwait, Iraq, Oman and Tunisia.
But building a data center can be slow. From getting regulatory approvals to procuring the necessary equipment, Fakhroo said it took 18 to 24 months to complete a data center. “It’s a good problem to have, but it’s still a problem. We can’t deliver fast enough.”
Aside from the competition for in-demand AI processors, the US has added Gulf countries to a list of regions where it needs licenses to export cutting-edge technologies over concerns about them leaking to rival China.
Fakhroo said Ooredoo’s Indonesian data center business already has Nvidia chips, and in the Middle East, it “plans to have its first batch of chips by the end of this year.”
Access to American AI chips is just one of many reasons Gulf countries are caught up in Washington’s rivalry with Beijing over trade and technology.
For Ooredoo, Fakhroo said, that means excluding Chinese hardware from data centers that cater to Western companies. Ooredoo still works with China’s Huawei in the telecom sector, but its data center customers include Western cloud computing companies like Microsoft and Google, so “we use Western technology and not Eastern technology.”
Analysts say regional telecom companies are looking to ventures like data centers for growth as expansion into traditional businesses slows.
“That’s not it [data centres are] “It will be a core business for telecom operators,” said Ziad Itani, managing director of Arqaam Capital.
But he said, “This is a new avenue for growth prospects,” while also allowing the carriers to monetize their infrastructure, since they already had data centers.
Ooredoo has established a Mena digital hub and said it plans to invest $1 billion in expanding its capacity in the coming years.
