Telecom operators spend big on data centers on spiking digital services

17-May-2021 Intellasia | Koreatimes | 5:02 AM Print This Post

South Korean telecom operators are joining other internet service providers in expanding their number of data centers nationwide as the COVID-19 pandemic drives increased demand for online services, and to tackle a surge in data traffic amid the increased penetration of the country’s 5G network.

On Wednesday, telecom giant KT opened a new internet data centre in Seoul’s southwestern Guro District, the company’s 14th.

Data centers are facilities housing servers and IT equipment that companies rent to store data or use to power their online services instead of operating their own infrastructure.

Demand for the facilities, popular with small companies and foreign IT firms, has grown as online activities, such as video streaming, social networking services and shopping, have increased in the past year amid the pandemic.

The value of the country’s server market is estimated to reach 1.8 trillion won ($1.59 billion) this year, up 2.4 percent from 2020, and hit 2.6 trillion won by 2025, according to a report from market researcher International Data.

While KT has so far operated its own data centers, the latest establishment is rented.

“There was a limit to respond to the explosive data centre demand, leading to the use of the data centre in Guro,” a KT official said.

In its first-quarter earnings, the company said sales from its “artificial intelligence” and digital transformation businesses, which include its internet data centre service, rose 7.5 percent year-on-year to 134.5 billion won ($119 million).

“With the opening of our centre in Yongsan, we saw a good performance in the first quarter,” KT Chief Financial Officer Young-jin Kim said in a conference call Tuesday.

KT opened the internet data centre in Yongsan, central Seoul, in November last year.

Smaller rival LG Uplus is also boosting its profile in the internet data centre business, investing 318.1 billion won to build a new server centre scheduled to open by the end of 2023.

The company has seen its internet data business grow recently, with the service’s first-quarter sales rising 8.4 percent from last year to 56.2 billion won.

The latest investment brings the number of LG Uplus’ major internet data centre facilities to seven.

Sales from the telecom operator’s internet data centre business stood at 228 billion won in 2020, up 16.1 percent from the previous year. (Yonhap)


Category: Korea

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