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20 November 2018, Copenhagen

Datacloud Nordic 2018

There’s a Great Deal Going On

Why the Nordic data centre market will continue to expand

Philip Low
Philip Low, Chairman
BroadGroup

Recent research by BroadGroup reveals continuing investment and growth in third party colocation facilities. Added to this, M&A has been extremely active across the sector in the region, and hyperscale investment has brought completely new large-scale opportunities most recently to Denmark.

BroadGroup has identified a number of factors that we feel will sustain further growth which include:

  • A reduction in energy taxation by Norway, Sweden and currently being implemented by Denmark over the next few years.
  • Availability of hydro-electric and wind energy with up to 15-year competitive fixed price contracts being offered.
  • Further investment by hyperscales is very likely – Cisco forecast around 30 data centers across Europe by 2020 and the assumption is that the Nordic region will secure a proportion of these new developments.
  • Incremental growth of existing third-party data centers and projects an increase in available power of 24.83% by the end of 2018 (source: Nordic Datacenters III, BroadGroup) particularly in Finland due to the introduction of new large facilities by Telia, Hetzner Online and Herman IT, and Sweden.
  • The Nordic region is in the purview of China’s One Belt One Road initiative. As China’s giant players begin to expand internationally along these routes, the Nordics can potentially harness new infrastructure investments. Linxtelecom, acquired by Chinese conglomerate CITIC has said that it intends to extend its network coverage to include Europe and Eastern Europe as part of the economic cooperation initiative.
  • Connectivity improvements are planned, and the possibility always exists that Norway will sink funding into a new direct cable to the UK.
  • Fintech is driving new investment and enquiry, particularly in Sweden – latency is a key issue for the sector and Sweden remains the most connected country in the region.
  • Land, connectivity and available power exist across brownfield and greenfield sites, well documented in Norway, Sweden and Finland. Denmark also offers similar opportunities with the benefit of terrestrial fibre connections directly into Germany and Europe and subsea cable to North America.
  • New investments are already being planned. The recent announcement by the Kolos consortium for a massive development in north-west Norway is an indicator of the appetite for expansion, and quest to access to significant green energy resources.
  • Ease of doing business is an increasingly important factor too, and most countries in the region have developed sophisticated channels and structures to make the decision for overseas investors as smooth and rapid as possible.

Nordic datacenter markets are due to change again over the next three years through the entry of new players, realignment of ownership not only of facilities but also of fibre networks through M&A, and using the benefit of abundant carbon neutral energy as a key competitive tool.

Although perceived as a “Tier 2” Data Center market, expansion and hyperscale development of datacenter space and adoption of cloud services is higher than the GDP and population size of the region would suggest. Cloud service providers are driving the use of m2 space, with both local and global providers establishing a cloud presence in the region.
As the development of autonomous devices seems to indicate that there will be a more dispersed cloud with a need for more connectivity, and a requirement for content hubs, the Nordics will also benefit from the growth in Edge. Collectively these drivers and initiatives will propel the region to increase its share of the west European market over the next three years.

It is also interesting to note the announcement by the European Commission of new “digital cross-border corridors” being planned which include the E8 "Aurora Borealis" corridor between Tromsø (Norway) and Oulu (Finland); and the "Nordic Way" between Sweden, Finland and Norway. Fibre links installed along these routes could add considerably to access for enterprises and datacenters.

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These and other key issues will be discussed at the forthcoming Datacloud Nordic conference and exhibition which takes place in Oslo on October 30th.

BroadGroup’s report Datacloud Nordic can be purchased online at www.broad-group.com/reports