Advertisement
Advertisement
Tencent
Get more with myNEWS
A personalised news feed of stories that matter to you
Learn more
People walk along a pedestrian walkway near the Tencent Holdings headquarters in Shenzhen on March 20. Photo: Bloomberg

Tencent accelerates global cloud push with its first data centre in Indonesia

  • Internet giant Tencent plans to establish new data centres across Asia, the Middle East and Europe
  • Tencent seeks growth overseas amid increased competition in cloud services at home, where it ranks behind Alibaba and Huawei
Tencent

Chinese internet giant Tencent Holdings is “aggressively” stepping up its presence in the global cloud computing industry this year, a company executive said, with new data centres launching in Asia, the Middle East and Europe to take advantage of higher demand for digitalisation spurred by the Covid-19 pandemic.

“This year we are going to be a lot more aggressive building out our [cloud] infrastructure around the world,” said Poshu Yeung, senior vice-president of Tencent Cloud International, in an interview with the South China Morning Post. “I’m not going to disclose the exact number and the timeline, but I can highlight that likely it’s going to be another 30 to 50 per cent growth in terms of the number of data centres.”

On Monday, Tencent unveiled a new data centre in Jakarta, its first in Indonesia, with another one set to go online in a few months. Yeung said the company chose Indonesia because it is “one of the fastest growing markets in the region”, where the population has embraced digital transformation during the pandemic, especially in fintech and government services.

When the second location is live, it will be the first time that Tencent launched two data centres in the same market within one year, Yeung said. “It shows how aggressive we are and how much we value Indonesia … and the entire Southeast Asia region,” he added.

Tencent’s accelerated cloud push overseas comes as competition heats up at home and abroad in cloud computing. Providers are rushing to meet rising demand for the technology that supports remote work and learning, e-commerce, online entertainment and other online services.

China’s cloud infrastructure market jumped 66 per cent to reach US$19 billion in 2020, while the global market rose 33 per cent to US$142 billion, according to analytics firm Canalys.

Data centres are costly to build and maintain, giving Big Tech companies an edge. But Tencent lags behind competitors at home and abroad. Photo: Shutterstock

In Asia, Tencent’s cloud business recorded triple-digit growth in 2020 during the pandemic, according to Yeung.

Beyond Indonesia, Tencent is set to open new data centres in Thailand, Malaysia and Japan this year, Yeung said. Tencent is also building its first Middle East data centre in Bahrain to cover the region, and it is working on a second facility in Frankfurt, Germany, that is expected to open in the second quarter this year.

Yeung said the company is exploring the Middle East and Africa as potential growth markets in the future. “We’re constantly exploring,” he said.

Tencent started its cloud business in China about a decade ago, but it has more recently stepped up its efforts to push the business abroad. The company currently has about 20 data centres operating in 13 regions outside of China, Yeung said.

Tencent’s domestic cloud investment has also been ambitious. In 2020, it vowed to invest 500 billion yuan (US$76.3 billion) over five years in new digital infrastructure, which includes the development of a network of large-scale data centres across the country, with a million servers deployed at each site.

Alibaba sees growth in cloud as China doubles down on digitalisation

Similarly, its Chinese rival Alibaba Cloud – the data backbone of Chinese e-commerce giant Alibaba Group Holding, owner of the Post – pledged last year to invest an additional 200 billion yuan over three years in its cloud infrastructure.
Alibaba has also been seeking other ways to expand its global reach. Last year, it partnered with data centre company Equinix and network technology company Aryaka to access clients around the world.
Alibaba is the biggest cloud service provider in China, which had 40 per cent of the market in the fourth quarter of 2020, followed by Huawei Technologies Co at 17 per cent and Tencent Cloud at 15 per cent, according to Canalys. Huawei has also made cloud computing a priority for 2021 as it looks for new sources of revenue after US sanctions put a chokehold on the company’s 5G and smartphone businesses, company founder Ren Zhengfei said in an internal speech.

Globally, Alibaba Cloud trails Amazon Web Services (AWS), Microsoft’s Azure and Google Cloud. In China, Azure operates through data centre firm 21Vianet Group. In fourth place, Alibaba had 6 per cent of the global cloud market in the fourth quarter, while Tencent Cloud had 2 per cent.

Matthew Ball, chief analyst at Canalys, said that Chinese companies are looking abroad for growth because the country only makes up 14 per cent of the global market. But growing overseas is not easy for Chinese companies.

01:07

Chinese police seize 4,000 bitcoin-mining computers that illegally tapped US$3 million worth of electricity

Chinese police seize 4,000 bitcoin-mining computers that illegally tapped US$3 million worth of electricity

“The biggest challenge is the requirement to build data centres locally in most countries, which takes time and huge resources,” he added. “Specifically for Chinese cloud service providers, another barrier is trust, particularly in Europe and more so in the US.”

Yeung noted that Tencent’s data centres comply with local rules. “The hardest part is to actually get local compliance and get the security checked. We’ve gone through basically everything,” he said.

Tencent already has broad business interests overseas, with an investment portfolio that includes multiple foreign gaming companies like US-based Riot Games and e-commerce platforms such as Singapore-based Shopee. Expanding its cloud offerings overseas also supports these interests.

“It makes a lot of sense for us to take care of our own business,” Yeung said. “This is one of the reasons why we [are building our cloud business] not just in Indonesia, but also around the world.”

Post