![Qatar’s Ooredoo wades into Gulf’s AI data centre rivalry](https://skynews.icu/wp-content/uploads/2024/09/Qatars-Ooredoo-wades-into-Gulfs-AI-data-centre-rivalry.png)
Stay informed with free updates
Simply sign up to the Artificial intelligence myFT Digest — delivered directly to your inbox.
Qatari telecoms company Ooredoo is borrowing QR2bn ($550mn) to expand its regional network of data centres, as the gas-rich Gulf nation seeks to capitalise on the information highway running through the Middle East.
Ooredoo is majority-owned by the Qatari government but listed and independently managed. Its data centre subsidiary, Mena Digital Hub, has obtained the 10-year financing facility from three Qatari banks and aims to overhaul and expand its data centres to meet demand for artificial intelligence applications.
Fossil fuel exporting Gulf nations are betting heavily on AI to diversify their hydrocarbon-dependent economies. They believe they can provide the cheap power needed to run the energy-hungry computing warehouses that crunch vast quantities of data for AI uses.
Analysts expect Saudi Arabia, the Gulf region’s largest economy, and the tech-focused United Arab Emirates to become the biggest markets for data centres and AI.
But Ooredoo also has big ambitions, aiming to build 120MW of data centre capacity in the next five years. That’s equivalent to about half of the region’s 237MW market today, according to data from international real estate firm Cushman & Wakefield, which projects that figure will more than double to 537MW by 2029.
In June, Ooredoo struck a partnership with US semiconductor maker Nvidia, which produces chips that can be used in data centres to handle AI’s intense computing demand.
In the Gulf “there’s space for probably three to four major players”, Ooredoo’s chief executive Aziz Aluthman Fakhroo told the Financial Times. “We hope to be one of those.”
Beyond cheap power and empty land, the Gulf is a particularly attractive market for the computing warehouses because regulators require local data to be processed within the country.
“We already have 26 data centres [in Ooredoo’s main markets] and we’re expanding,” said Fakhroo, adding that “30 per cent of the world’s connectivity flows through [the] region”.
Ooredoo has data centres in Qatar, Kuwait, Iraq, Oman and Tunisia, as well as in Indonesia, under Indosat Ooredoo Hutchison.
But building data centres can be slow going. From obtaining regulatory approvals to securing the sought-after equipment needed to kit them out, Fakhroo said it was taking between 18 to 24 months to complete a data centre: “It’s a good problem to have, but it’s still a problem. I can’t deliver them fast enough.”
Aside from competition for in-demand AI processors, the US has put the Gulf states on a list of geographies requiring a licence to export the cutting-edge technology, over concerns about leaks to its rival China.
Fakhroo said Ooredoo’s Indonesia data centre business had already got Nvidia chips, while in the Middle East, “we’re looking to obtain the first batch of chips by the end of this year”.
Access to the US-made AI chips is just one way countries in the Gulf have ended up caught in the crossfire of Washington and Beijing’s competition over trade and technology.
For Ooredoo, Fakhroo said that had meant keeping Chinese hardware out of data centres that catered to western companies. Ooredoo still worked with China’s Huawei in telecoms but, because its data centre clients included western cloud computing companies such as Microsoft and Google, they “are running western technology and not eastern technology”.
Analysts say regional telecoms companies are looking to ventures such as data centres for growth, as the expansion of their traditional business slows.
“It’s not like [data centres are] going to be the bread and butter of the telecom players,” said Ziad Itani, executive director of Arqaam Capital.
But “this is a new avenue for growth prospects”, he said. “At the same time it allows you to monetise your infrastructure”, because telecom operators already had data centres.
Ooredoo has carved out Mena Digital Hub, and says it plans to invest $1bn to expand its capacity in the coming years.