Strong Growth in Keppel’s Connectivity Business Underscores the Lucrative Opportunity for Data Center Solution Providers in Southeast Asia

In February 2025, Keppel Ltd announced its financial results for the full year ended December 31, 2024. As a whole, the organization reported a 5% Year-over-Year (YoY) increase in net profits to US$790 million (SGD1,064 million). In particular, Keppel’s connectivity business—consisting of its data center operations and ownership of Communication Service Provider (CSP) M1—reported a 45% increase in net profit from US$94 million (SGD127 million) in 2023 to US$136 million (SGD184 million) in 2024. Underpinning the significant growth in Keppel’s connectivity arm is the rapid development of digitalization efforts and Artificial Intelligence (AI) advancements, which has seen the organization increase its data center gross power capacity from 240 Megawatts (MW) in 2018 to 650 MW in 2024, representing an increase of over 270%.

Keppel owns and operates 35 data centers globally, with more than half of them located in Asia-Pacific countries such as Singapore, Malaysia, China, Indonesia, and Australia. The organization is optimistic about the digital opportunity in the region and has announced plans to further expand total power capacity to 1.2 Gigawatts (GW) over the next several years, and invest in developing more subsea cables to link Southeast Asia to the broader Asia-Pacific region and beyond.

Keppel is not the only company that has high hopes for the Southeast Asian region. Major firms, such as TikTok, have recently announced plans to invest over US$3.7 billion to build data center infrastructure in Thailand. This follows earlier announcements by Western hyperscalers, such as Google, Microsoft, and Amazon, about their plans to also invest heavily in building data centers in the country. Similar momentum is also being observed in other Southeast Asian countries, such as Malaysia, Indonesia, and Vietnam, which recently revised its telecoms regulations to now allow 100% foreign ownership of data centers in the country. The above trends clearly point to an increasing appetite for cloud and AI services in the region, representing a lucrative opportunity for both public and private cloud service providers to capitalize on.

However, with the rapidly developing digital economy in the region, many regulators and players in the industry have raised concerns about the surge in water and energy demands needed to support these data centers. For example, regulators, such as the Infocomm Media Development Authority (IMDA) in Singapore, have recognized the challenge and introduced new data center operating standards to address the increase in energy demands.

To address the above challenges, many data center infrastructure vendors are introducing new sustainable solutions to minimize water and electricity usage in data centers. Focusing on software, ABI Research has identified some of the trends and features of sustainable solutions that are being used to differentiate one’s software product offerings from their competitors below.

• AI Integration: The use of AI is increasingly being seen as a means to help enterprises meet their sustainability goals by increasing the efficiency of workplace operations, reducing waste, and simplifying monitoring and reporting. Solution providers, such as NUMEN AI (Australia), are looking to offer non-intrusive solutions to monitor, track, and report energy consumption of data center operations. With the use of proprietary AI algorithms, these solutions can increase production efficiency by identifying poor power quality, potential equipment faults, and safety-related scenarios.
• Flexibility of Deployment: Given that data center operators have varying requirements and deployment considerations, it is important for data center solutions to be highly flexible to support different deployment modes. Vendors, such as Schneider Electric (France), are looking to address this by offering Data Center Infrastructure Management (DCIM) solutions that are vendor-agnostic and can be deployed in on-premises, at the edge, or in cloud environments.
• Highly Customizable End-to-End Solutions: Rather than having to manage multiple separate systems, data center operators are also looking for an end-to-end solution that is easy to use. Vendors, such as Sunbird (United States), are looking to capitalize on this and offer software solutions that are not only comprehensive, but also highly customizable according to each customer’s requirements.

The growing demand for cloud and AI services in the Southeast Asian region presents new opportunities for data center solution innovators. ABI Research forecasts the number of next-generation data center colocation and hyperscalers sites within Asia-Pacific (excluding China) to reach 2,100 and 270, respectively, by 2030, at a Compound Annual Growth Rate (CAGR) of 10.5% and 5.6% between 2023 and 2030. However, to truly capitalize on this opportunity, solution providers need to have a strong understanding of geographical challenges and Information and Communication Technology (ICT) growth dynamics to build a robust go-to-market strategy.