Saudi Telecom Company, the biggest telecommunications operator in the kingdom by market value, will invest $500 million in cloud services in a partnership with venture capital fund eWTP Arabia Capital and Alibaba Cloud, the technology arm of Chinese e-commerce firm Alibaba.
The agreement will help Saudi Arabia, the Arab world's largest economy, to become the "digital and cloud services hub" in the Middle East and North Africa region, it said in a statement.
“Through this project, STC aims to reinforce digital infrastructure and to leverage the proven cloud-based technologies and services of Alibaba Cloud to accelerate the growth of [the] local technology ecosystem … in alignment with Vision 2030 objectives,” it added.
The take-up of cloud services is increasing in the Gulf, aided by ongoing investment by cloud providers and the continued need for remote working arrangements due to the Covid-19 pandemic, according to the International Data Corporation.
The GCC public cloud market is expected to more than double in value by 2024, growing from $956m in 2020 to $2.35 billion at an annual growth rate of 25 per cent, the IDC said.
“Saudi Arabia is a strategic market for us,” Jeff Zhang, president of Alibaba Cloud, said in a statement.
"Alibaba Cloud is committed to delivering its best-in-class services and business practices to accelerate the digital transformation of its partners and customers in the kingdom," he added.
Saudi Arabia’s accelerated growth in cloud infrastructure is attracting global tech companies.
Last week, Saudi Aramco Development Company, a subsidiary of the state-owned oil company, partnered with Alphabet-owned Google to set up a new cloud region in the kingdom.
High-tech multinationals are "waking up to the booming Saudi digital economy", establishing physical data centres in the kingdom, said Sam Blatteis, chief executive of The Mena Catalysts, which advises technology companies on policy and government affairs in the region.
“Saudi Arabia has invested over $4bn in cloud computing to date … the kingdom’s cloud computing economy has grown over 50 per cent on average per year [over] the last four years,” Mr Blatteis added.
“The Saudi cloud economy's never-ending creation of data explains why demand in data centres will likely surge in the future … making the Saudi cloud computing market an emerging competitive arena for the world’s largest tech companies.”
In October, the Saudi Data and Artificial Intelligence Authority joined forces with Alibaba Cloud to develop smart cities using artificial intelligence.
And in December, SDAIA partnered with US company Dell to build advanced capabilities in emerging technology such as artificial intelligence and machine learning.