UBS(US:UBS)2025-12-01 01:29Summary of Key Points from the Asia Telecom Sector Conference Call Industry Overview - Industry: Data Centre Sector in Asia, with a focus on ASEAN region [1][2] Core Insights 1. Capacity vs. Demand: There is a significant gap between announced data centre capacity and actual operational supply, with demand growing at a compound annual growth rate (CAGR) of over 20% [2][3] - Example: In Johor, Malaysia, approximately 8 gigawatts (GW) of new capacity announced, but only about 700 megawatts (MW) operational, which is less than 10% [2] - Japan's planned facilities for 2028 are now expected to be completed by 2033 [2] 2. Infrastructure Bottlenecks: Persistent infrastructure issues, including water, power generation, transmission, and regulatory hurdles, are constraining growth and creating a competitive environment [2][3] 3. AI vs. Cloud Computing: While AI is a growth catalyst, cloud computing remains the primary driver of demand in the region, sustaining a robust CAGR of around 20%+ [3][5] - AI deployments are significant in select markets but are less predictable and time-sensitive compared to traditional cloud workloads [3] 4. Cost Dynamics: AI-focused data centres can be built at approximately 60% of the cost of traditional facilities due to lower redundancy needs and cheaper land options [5] 5. Competitive Landscape: The competitive dynamics are shifting rapidly, with an increase in mergers and acquisitions (M&A) in the sector, driven by hyperscalers' preference for large-scale global providers [5] 6. Emerging Trends: The rise of "neo clouds," which are smaller, niche platforms offering specialized AI or cloud services, is beginning to take up more capacity [3] Additional Considerations - Regulatory Risks: Increased regulatory risks, particularly concerning higher spectrum prices, pose challenges for telecommunications companies in the APAC region [6] - Investment Opportunities: The ongoing consolidation in the data centre market presents potential investment opportunities, especially for firms capable of navigating the evolving landscape [5] This summary encapsulates the critical insights and trends discussed during the conference call, highlighting the challenges and opportunities within the data centre sector in Asia.