Philippines urged to leverage undersea cables to attract data centre investment

Fitch Solutions unit BMI says the Philippines must use its subsea connectivity and secure power supply to compete for hyperscale data centre deployments as neighbouring markets near saturation. The country has 43 MW under construction and 221 MW planned, with a target of 1.5 GW of capacity by 2028.

The Philippines must leverage its subsea connectivity and build a secure power supply to expand its data centre capacity, according to Fitch Solutions unit BMI. Rather than benefiting from automatic demand spillover as Malaysia and Indonesia approach saturation, the Philippines will need to actively compete for hyperscale deployments by leveraging its subsea connectivity, BMI said in a report.

Data centre growth will largely depend on the government’s efforts in streamlining permit bottlenecks that are affecting the pace of capacity delivery, BMI added. Philippine data centre capacity remains concentrated around the capital, it said, noting that with saturation risks in mature Southeast Asian markets, the Philippines is positioning itself to capture displaced demand.

Major Philippine telecommunications companies are proposing a US$500-million nationwide undersea fibre-optic network to expand connectivity across the Philippines. The proposal calls for laying undersea fibre-optic cable from Batanes to Palawan, with links extending to the Visayas and Mindanao.

The Philippines has 43-megawatt (MW) capacity under construction and an additional 221 MW of planned capacity in the pipeline, BMI said. The direction of development is shifting incrementally towards higher-density campuses as the nation looks to ramp up its AI ambitions.

The Philippines is on track to hit 1.5 gigawatts worth of data centre capacity by 2028, with a favourable regulatory framework and geographic advantages expected to attract foreign operators, according to the Data Center Association of the Philippines. The Department of Information and Communications Technology (DICT) projects data centre capacity assumes the expansion of domestic operators as well as the entry of foreign operators.

Earlier this month, the DICT launched its AI+ Infrastructure Masterplan which set an investment target of US$34.4 billion until 2033, boosted by plans by at least two US hyperscalers to start setting up 400 MW as early as next year.