KUALA LUMPUR: Telekom Malaysia Bhd (TM) is setting up a joint venture with Singtel's regional data centre platform Nxera MY Pte Ltd to develop data centres (DCs) in Malaysia, kicking it off with a hyper-connected artificial intelligence (AI)-ready data centre campus in Iskandar Puteri, Johor.
The move is part of its ambitions to become a market leader in DCs.
TM already operates seven DCs in Klang Valley and Johor.
TM through TM DC Educity Sdn Bhd entered into a conditional joint venture agreement with Nxera MY and ST Dynamo DC to jointly develop and operate greenfield DC facilities in Johor.
The JV needs to get Economic Planning Unit's approval to waive the 30 per cent Bumiputera equity requirement.
TM DC Educity will hold a 51 per cent interest in the joint venture while Nxera will own the remainder.
Both JV partners have agreed to pump in RM1.15 billion into the JV, with TM's portion of RM588 million to be funded internally.
Located in Iskandar Puteri, just 16 km from Singapore, the initial 64 megawatt (MW) DC will be the largest to-date for both TM and Nxera.
The four-storey building is expected to be operational in 2026 and a cloud-enabled Tier 3 facility.
It can be scaled up to 200MW in response to market demand.
Nxera is currently constructing its largest data centre to-date in Tuas, Singapore with a capacity of 58 MW.
ST Dynamo DC, a company wholly owned by Nxera has signed a conditional sale and purchase agreement to purchase the almost 16.9 hectare land where the DC will be developed from Iskandar Investment Bhd's 80 per cent-owned River Retreat Sdn Bhd for RM178.2 million.
The campus will be able to host large computing and AI capabilities such as requirements by cloud hyperscalers, GPU-as-a-Service providers and features advanced technologies such as liquid cooling to support high-power density workloads and operations efficiently.
TM in its filing with Bursa Malaysia Securities Bhd said working with a partner with a proven track record and capabilities such as Singtel to develop the proposed data centre serves as an important milestone for TM in achieving its long-term data centre strategy as it will help strengthen TM's foothold in the data centre landscape in Malaysia.
Additionally, the proposed joint venture allows TM to enjoy synergistic benefits and provide greater value to its customers while growing its data centre business via various initiatives such as partnerships with strategic investors.
According to TM, with its close proximity to subsea cable links between Singapore and Malaysia, the data centre will be well-placed to support the increasing demand from both countries' digitalisation and development initiatives.
TM group chief executive officer Amar Huzaimi Md Deris said the group brings the largest domestic network infrastructure, extensive international subsea cable systems and the largest interconnected DC in Malaysia, a solid backbone for this project.
"This will serve as a catalyst for high performance computing and lay a solid foundation for the future advancement of cloud and AI applications. "This collaboration of two main telcos in the region is unique and has positive impact to the development of digital ecosystem that not only benefit the businesses but also nurturing future talent," he said in a statement.
Nxera and Singtel's Digital InfraCo unit chief executive officer Bill Chang said in addition to data centres, they will be expanding the submarine cable connectivity between Singapore and Johor to enhance digital connectivity.
"Our strategy of developing data centre sites with close proximity to our operations in Singapore allow us to capture spill-over demand from our customers and help them scale their business with confidence," he said.
Its entry into the Asia Link Cable Systems (ALC) partnership facilitates the laying of a submarine cable system spanning approximately 7,200 kilometre, with an initial design capacity of 24 terabits per second.