Data centers to cost 6x higher in 2029

MANILA, Philippines — Telcos like PLDT Inc. and Globe Telecom Inc. may have to spend six times more to put up new data centers as a result of a valuation boom triggered by the shift to automation.

Based on Bain & Co.’s Technology Report 2024, builders will have to shell out as much as $25 billion to construct high-capacity data centers five years from now.

To date, Bain & Co. estimates that building large-scale data centers will require a capital of $4 billion, six times less than the projected price by 2030.

Bain & Co. said the expanded role of artificial intelligence (AI) in several industries would demand data centers to offer higher scales.

This means data center builders like PLDT and Globe have to invest more to keep up with the AI demand.

Currently, the industry operates mostly data centers with a capacity of 50 megawatts to 200 MW. Within the next decade, capacity may have to be in the gigawatt or higher level to serve the data requirements of companies reliant on AI.

“If large data centers currently cost between $1 billion and $4 billion, costs for data centers five years from now could be between $10 billion and $25 billion,” the report read.

Based on existing data, Bain & Co. said a 100-MW data center demands at least $2 billion, while a 500 MW data center takes up a minimum of $10 billion.

Apart from capital strain, Bain & Co. believes data center operators would have to contend with labor shortage down the line, as GW level projects employ as many as 7,000 workers.

“Large data centers are major construction efforts, requiring five years or more. The demand for construction and specialized laborers – as many as 6,000 to 7,000 workers at peak levels – would strain the labor pool,” the report read.

PLDT, through VITRO Inc., manages the widest network of data centers in the Philippines right now. In July the leading domestic telco finished its biggest data center to date, VITRO Sta. Rosa, which offers a capacity of 50 MW.

On the contrary, Globe is pursuing a $1-billion initiative in Quezon City to construct the biggest data center in the country.

Tech giants like Amazon, Google and Meta depend on the data centers to store their applications and information, making them crucial infrastructure in the digital era.