The first quarter of the year was a busy one. M&A was at the forefront of activity as strategic rationales drove deals of varying sizes. None were bigger than the Telstra acquisition of Pacnet. Telstra wants to get a greater foothold across the Asia-pacific region as data centre expansion continues to progress in primary markets like Singapore, Hong Kong, Sydney and Melbourne.
There are emerging pockets of activity in other markets like Jakarta, Taipei and Kuala Lumpur but top markets like these remain the busiest due – at least partly – to the influx of companies expanding into the Asia-pacific from outside the region.
Hosting and cloud infrastructure are still building momentum in the region but mature markets like Australia are already moving to that proverbial next stage. Showing how fast things are moving, in the last quarter there was meaningful movement in the managed third party cloud market with results starting to register on the balance sheet.
There is a real divide between the mature and emerging markets of the region. Mature markets are seeing pockets of decelerating growth and a transition to next-generation infrastructure platforms – similar to dynamics seen in other mature markets around the world. And now there is an emerging line between locally-based providers and competitors that are expanding into the region from the US and Europe. The US and European entrants continue to serve mostly existing customers but it is a matter of time before more overlap and penetration into the local market begins.
Despite all the moving parts, the growth trajectory of the sector continues to be solid as our tracking of listed companies show. The region continues to mature but there are still growing pains as the last quarter was witness to a number of outages.