Etisalat Group, the UAE’s biggest telecoms operator, and artificial intelligence services provider G42 signed a binding agreement to merge their data centre services to create the UAE's largest data centre provider in an effort to cater to the rising digital requirements.
The joint venture, which will combine 12 data centres owned by the Abu Dhabi-based companies, will operate under Khazna Data Centres.
G42 and Etisalat Group will own 60 per cent and 40 per cent, respectively, in the new joint venture, the companies said on Wednesday.
The deal will allow both parties to increase the value of their infrastructure assets, without affecting their respective commercial positioning, client relationships and leading market positions.
“Etisalat and G42 are embarking on a bold new journey that will allow us to leverage our investments and expertise to deliver next-generation digital infrastructure," said Etisalat Group chief executive Hatem Dowidar.
Data consumption has increased over the past year owing to the coronavirus-induced remote work trends and this has fuelled the adoption of cloud services.
The data centre market in Mena region is expected to grow at a compounded annual growth rate of around 8 per cent to hit $5 billion by the end of 2026, according to a study released this year by Arizton Advisory and Intelligence.
The UAE has led in terms of attracting investment into data centres, the study showed.
In 2019, Software company Microsoft opened two data centres, one each in Abu Dhabi and Dubai. Amazon Web Services, the world's biggest cloud storage service provider, said it will open three data centres in the UAE in the first half of 2022.
Dubai-based telecoms operator du last month began operations at its own data centres, one in Abu Dhabi and the other in Dubai.
Peng Xiao, group chief executive of G42, said the partnership will strengthen the UAE’s data centre capabilities and its economic ambitions.
"As data storage and cloud infrastructure demand continues to rise in the UAE and globally, this new partnership between Etisalat and Khazna, our data centre business, will allow the country to accelerate its digital transformation journey, propelling public and private organisations into a new era of intelligence, resilience, flexibility and commerciality," he said.
Hassan AlNaqbi, chief executive of Khazna Data Centres, said the company, with a capacity of 300 megawatts, will be the "crown jewel" that will support the growth trajectory of businesses and their ability to manage the level of connectivity required to effectively deliver services to partners, customer and users.
Salvador Anglada, chief business officer of Etisalat Group, said the “combination of our data centre capabilities will deliver a unique portfolio of infrastructure services for current customers and will also create a market leader for the future to global hyper-scalers".
"We believe that this transaction will further strengthen the UAE as a preferred destination for global technology companies seeking world-class presence in the region, and propel the development of the digital ecosystem in support of the growth ambitions, which UAE is well positioned to capitalise upon.”
The closing of the transaction is subject to customary procedures, including the finalisation of transaction documents, regulatory approvals and certain administrative procedures.