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Soaring data demand drives boom

29 May 2023

 

> This package also includes: Region plans vital big grid connections
Power links carry economic, climate and political significance

The world’s longest submarine communications cable system reached its first two landing sites in Jeddah and Yanbu in Saudi Arabia in early May.

The 45,000-kilometre 2Africa cable system will arrive at its third landing site in Duba, Saudi Arabia, later this year and its fourth site in Al-Khobar in 2024. 2Africa will take the number of submarine cable system landing sites in Saudi Arabia to 27, with 13 located in the Red Sea port city of Jeddah.

An expansion in submarine cable landing sites supports the kingdom’s ambition – and that of the broader Middle East and North Africa (Mena) region – to become a global digital hub.

The submarine cables enable high-speed, low-latency connectivity between regions and facilitate the transfer of vast amounts of data across national borders. They can help to unlock significant economic potential arising from products and services enabled by information technology (IT) and data connectivity, including e-commerce, machine learning, Big Data and artificial intelligence (AI).


Source: Telegeography

This will be supported by the strategic geographical advantage of Middle East countries to connect the digital traffic and services between Asia, Africa and Europe – a development that is being mirrored by the planned long-distance power interconnectors across the region.

“Subsea cables provide faster and more dependable internet access than older methods such as satellite or microwave communications,” says Ziad Samaha, an executive with UAE-based Khazna Data Centres.

Driving investment

Kamel al-Tawil, managing director for Mena at US-headquartered firm Equinix, also notes that the increased connectivity provided by subsea cables “can help attract more international businesses to the region, driving economic growth and creating new opportunities for the data centre and wider IT industry”.

The largest telecommunications companies and their data subsidiaries have been building data centres to support their operations and clients’ requirements in recent years.

The explosive growth in data and the advent of cloud services – or renting software applications as opposed to buying licences to use them – in addition to general uncertainty about regulations governing data sovereignty in most jurisdictions, have propelled the region into a data centre-building boom.  

This began when US-based Amazon Web Services (AWS) established its first availability zone or data centre cluster in Bahrain in 2019. AWS has since built availability zones in the UAE, with further plans to invest $5bn over 15 years to enhance its data infrastructure in the country.

The scale of Saudi Arabia’s ambition to become a digital hub has been met with commitments to build data infrastructure within the kingdom. Chinese telecoms giant Huawei is investing $400m to build a cloud services infrastructure, while Silicon Valley giants Microsoft and Oracle have committed to investing $2.1bn and $1.5bn, respectively, in the kingdom.

“The demand for data centre services in the region is growing rapidly, and continued investment in digital infrastructure will be critical to supporting the region’s long-term growth and development,” says Al-Tawil.

Regionally headquartered firms are determined to corner a significant piece of the data centre market, which is forecast to grow by a compounded average of 7.59 per cent annually between 2022 and 2028, thanks to strong demand from industries such as finance, healthcare and telecommunications.

Emboldened by its merger with Injazat Data Systems and the backing of both Abu Dhabi-headquartered G42 and its shareholder Mubadala Investment Company, Khazna Data Centre Services is expanding its UAE data centre capacity.

It has also announced a plan to enter the Egyptian market with a planned $250m investment in a 25MW data centre facility at the Maadi Technology Park in Cairo. A further phase could see Khazna doubling the facility’s capacity to 50MW, enabling it to achieve hyperscale status, comparable to the largest data centre facilities in the region and around the globe.

The explosive growth in data has propelled the region into a data centre building boom

Digital transformation

With a young and tech-savvy population, rising internet penetration and greater adoption of cloud-based technologies, Middle East governments have also been actively promoting digital transformation.

This has led to the development of large data centres that provide connectivity and data exchange services for businesses and organisations worldwide.

“Given this growth trajectory, the region is projected to require ongoing investment in data centre capacity,” says Samaha.

The specific amount of necessary investment will be contingent on various factors, including the rate of technological innovation, the level of demand from businesses and consumers, and the regulatory environment.

AI-powered data

“The rapid growth of data generation fuelled by AI has transformed how data is stored, processed, managed and transferred while increasing the demand for computing power across cloud and edge data centres,” says Samaha.

Equinix’s Al-Tawil agrees, noting that AI technologies, particularly machine learning, rely on large volumes of data for training models. His company is investing in data centres as well as in a dedicated fibre optic gateway connecting two facilities in Muscat and Dubai.

“As the adoption of AI continues to accelerate, there will be a surge in demand for data storage and processing. This growth in data generation … will require enterprises to invest in scalable and high-performance infrastructure to meet these demands effectively,” the executive concludes.

Region plans vital big grid connections

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Jennifer Aguinaldo

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    The 170-storey Jeddah Tower will have a variety of revenue streams and will
    feature the world’s highest observation deck. Credit: Jeddah Economic Company

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    > POLITICS: Saudi Arabia looks both east and west
    > SPORT: Saudi Arabia’s football vision goes global
    > ECONOMY: Riyadh prioritises stability over headline growth
    > BANKS: Saudi banks track more modest growth path
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    > DOWNSTREAM: Saudi chemical and downstream projects in motion
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    > GIGAPROJECTS: Gigaproject activity enters full swing
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    Colin Foreman
  • Saudi Arabia’s football vision goes global

    27 September 2023

    MEED's October 2023 special report on Saudi Arabia also includes: 

    > POLITICS: Saudi Arabia looks both east and west
    > GIGAPROJECTS: Gigaproject activity enters full swing
    > TRANSPORT: Infrastructure projects support Riyadh’s logistics ambitions
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    Establishing the Saudi Pro League as one of the best will enhance the kingdom’s desire for a say at the highest levels of global club football

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    There are also signs that the British football boom, which began after the English premiership was created in 1992, is coming to an end. Top clubs enjoyed a windfall from satellite television rights and then the influx of investment from wealthy individuals, starting with Russia’s Roman Abramovitch 10 years later. This has now been overshadowed by the financial might of Abu Dhabi and Saudi Arabia in England and by Qatar, owner of Paris Saint Germain since 2011, in France.

    But the appetite among even the wealthiest investors for football assets may be fading. Earlier this year, Manchester United’s owners rejected an offer for the club from Qatar as inadequate.

    Sports Saudisation

    Saudi Arabia’s new approach is different. Instead of sending money overseas, it is looking to invest heavily in football within the kingdom. In the 2023 summer transfer season, Saudi Pro League clubs spent a net $907m on players, more than all of the Big Five leagues but the Premier League, which spent $1.39bn.

    The economic benefits are easily comprehended. PIF finance would go into building domestic stadiums and training facilities. Money paid to players and support staff would be retained in the kingdom. In addition to a domestic audience of football fans, Saudi Arabia has international airports and an aviation network to bring in fans from across the globe.

    Establishing the Saudi Pro League as one of the best will enhance the kingdom’s desire for a say at the highest levels of global club football. 

    European football’s perilous financial position is why plans for a European Super League comprising 12 teams, announced in the spring of 2021, initially attracted support from the clubs involved. It was scrapped at the last minute, but dreams of a super league – and the problems that inspired it – remain. It is conceivable that the kingdom could argue a case for membership should it be revived, though that is a consideration for the future.

    In the meantime, Saudi Arabia’s impact on football is already being felt. Last December, Portugal’s Cristiano Ronaldo signed for Riyadh’s Al-Nassr. Other top players that have since signed to play in the kingdom include Brazil’s Neymar, Ballon d’Or holder Karim Benzema, African Footballer of the Year Sadio Mane, World Cup winner N’Golo Kante and former Liverpool captain Jordan Henderson.

    In July, Kylian Mbappe turned down an offer from Riyadh’s Al-Hilal worth almost €300m ($321.5m) and a salary of €200m for a one-season stay. But – in what would be a coup for the Saudi league if it is accepted – a world-record signing fee is reported to have been offered by Al-Ittihad in September for Egypt’s Mohamed Saleh.

    Newcastle United could fit into the kingdom’s broader football plan as a source of talent that can be sold to the Saudi league to bring money into the English club while avoiding the fair play charges encumbering Manchester City. The first example of the process may have been Allan Saint Maximim, who was transferred to Al-Ahli for a reported transfer fee of almost $30m in July.

    Last summer, Riyadh also launched what is now the Liv Golf League. There has also been talk of it buying a US National Football League club. The kingdom is investing in other sports as well, but it is football that it is bringing home this autumn.

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    Edmund O’Sullivan