Latin America Data Center Colocation Market Outlook 2024-2029: Implementation of Tax Incentives Appealing to Data Center Investments, Edge Data Center Deployments Fueled by the 5G Surge - ResearchAndMarkets.com

The "Latin America Data Center Colocation Market - Industry Outlook & Forecast 2024-2029" report has been added to ResearchAndMarkets.com's offering.

The Latin America Data Center Colocation Market was valued at USD 1.12 billion in 2023, and is projected to reach USD 1.81 billion by 2029, rising at a CAGR of 8.33%.

Several governments across the LATAM region have initiated schemes and incentives to attract data center investments and contribute to the growth of the Latin America data center colocation market. In Colombia, a free trade zone has been introduced. Likewise, Patagonia is emerging as a data center hub in Chile, as the government has planned several tax incentives to grow the data center market.

Ascenty (Digital Realty), Scala Data Centers, ODATA (Aligned Data Centers), Equinix, HostDime, KIO Networks, EdgeConneX, Angola Cables, Cirion Technologies, Elea Data Centers, and V.tal are some of the key companies in the Latin America data center colocation market making investments in the development of multiple data center facilities in 2023 and later.

Layer 9 Data Centers, Ada Infrastructure, Surfix Data Center, CloudHQ, and DHAmericas are some of the new entrants into the Latin America data center colocation market currently involved in developing data center facilities across the region. The entry of several new colocation operators in the market is likely to increase competition among companies. As a result, companies offering better and sustainable solutions are likely to attract more customers and gain a higher market share.

MARKET OPPORTUNITIES & TRENDS

Boost In 5G Connectivity Due to Edge Data Center Developments

In Latin America, 5G connections will account for about 60% of the total mobile connections by 2030. The deployment of 5G networks will power modern edge devices, remote working, and further advancements in related technologies. Brazil is leading the way in 5G technology deployments. Other countries, including Mexico, Argentina, Colombia, and Peru, are in the trial stage. Furthermore, in December 2023, Colombia's Ministry of Information Technologies and Communications (MinTIC) authorized Claro, Partners Telecom Colombia (WOM), Union Temporal Colombia Movil-Telefonica, and Sociedad Futura Telecall Colombia to get on board with the 5G auction, that is likely to generate a revenue of about USD 500 million.

The rising deployment of 5G services and the growth in demand for connectivity in new locations and Tier I and II cities have attracted investments from edge data center operators. For instance, edge operators, including Surfix Data Center, Brisanet, V.tal, and EdgeUno, invest in establishing multiple edge data centers across Brazil, Chile, Colombia, and Mexico.

Increase in Sustainable Initiatives

Latin American governments, such as Brazil, Chile, Mexico, and Colombia, have set sustainability targets. They work together to diversify their electrical networks to support the policy and regulatory changes that encourage using renewable energy sources. Brazil, Chile, and Mexico have tremendous influence among their neighboring countries, allowing them to present their renewable energy policies as a viable model for the other countries in the region to follow suit.

Digital Economy

Governments and other regional organizations have taken initiatives to develop and grow the digital economy in the region. These initiatives aim to increase the region's digital transactions and smart payment technologies, which are prevalent in India, the UAE, and the US. According to the World Bank Group, about three-quarters of the Latin American population has internet connectivity, yet 35% of the individuals still prefer cash to digital payment methods.

In January 2024, Amazon customers in Mexico could choose Kueski Pay, a Buy Now Pay Later (BNPL) option. This provides the purchase plans of 12 bi-weekly installments through linked bank accounts, debit cards, or cash under respective networks.

SEGMENTATION INSIGHTS

• The transition toward a sustainable future is evident among data center operators in the Latin America region. For example, in May 2024, Scala Data Centers conducted a trial using hydrotreated vegetable oil (HVO) to power its backup generators.

• The Latin America data center colocation market is increasingly adopting advanced cooling techniques, including air-based and liquid-based systems. Innovations such as liquid immersion cooling and cutting-edge air conditioning technologies have been implemented. Given the high temperatures in certain Latin American countries, data centers are prioritizing investments in cooling infrastructure.
• Major electrical infrastructure providers in the region - such as Eaton, Caterpillar, Cummins, Legrand, ABB, Rolls Royce, and Schneider Electric - are collaborating closely with data center operators to equip facilities with reliable electrical infrastructure. This includes uninterruptible power supply (UPS) systems and generators to ensure at least N+1 redundancy. A notable example is KIO Networks' BOG 1 data center, which utilizes Cummins diesel generators.
• There has been significant growth in the establishment of data centers within the region, particularly those achieving Tier III and IV certifications. All newly built data center facilities are certified as either Tier III or Tier IV by the Uptime Institute.

REGIONAL ANALYSIS

• Brazil has multiple colocation providers, such as Ascenty (Digital Realty), Equinix, Scala Data Centers, ODATA (Aligned Data Centers), Elea Data Centers, and others. Several telecom providers, namely GlobeNet Telecom, Ava Telecom, and Embratel have expanded their presence in the country. Colocation operators lead investments in the country and are expected to witness further growth with several new project announcements.
• In 2023, Brazil led the Latin America data center colocation market, accounting for over 48% of the market share in investments, followed by Mexico, Chile, and Colombia.
• Several countries in the region are actively involved in establishing Special Economic Zones (SEZs), Free Trade Zones (FTZs), Export Processing Zones (EPZs), business parks, and industrial zones, which provide attractive benefits, such as tax incentives for international businesses.
• The Latin America data center colocation market saw growth potential in subsea cable projects, connecting it with other regions and countries across the planet. Mexico City has emerged as the primary data center location in Mexico, with eight existing third-party data centers. Cancun has emerged as another major location with about six submarine cable landing stations.
• Santiago, the Chilean capital, has witnessed data center development due to its strategic location and its economic and social capital. Most data center operators in Chile, such as ODATA (Aligned Data Centers), Ascenty (Digital Realty), and EdgeConneX, primarily have data centers in Santiago.
• Among Latin American countries, Brazil, Columbia, Argentina, and Paraguay have actively adopted renewable energy for most of their energy needs, significantly reducing their respective carbon footprints.
• Mexico is also expected to ramp up its renewable energy adoption in the forecast period, following the worldwide trend of promoting the use of renewable energy. In 2023, just over 30% of the overall energy mix was renewable in the country.

KEY QUESTIONS ANSWERED

• How big is the Latin America data center colocation market?
• What are the key trends in the Latin America data center colocation market?
• What is the estimated market size in terms of area in the Latin America data center colocation market by 2029?
• How many MW of power capacity is expected to reach the Latin America data center colocation market by 2029?
• What is the growth rate of the Latin America data center colocation market?

Key Attributes:

Premium Insights

Latin America Data Center Colocation Market Statistics & Vendor Spectrum

• Trends in the Internet & Data Growth
• Data Center Design Certifications
• Uptime Institute Tier Standards
• Leed Certification
• Tia 942 Certification

Market Opportunities & Trends

• Edge Data Center Deployments Fueled by the 5G Surge
• Sustainable Initiatives Launched
• Deployment of Artificial Intelligence (AI) Workloads in Data Centers
• Submarine Cables are the Backbone of the Data Center Industry

Market Growth Enablers

• Increase in Demand for Cloud-based Data Centers
• Big Data & IoT Boosting Data Center Investments
• Implementation of Tax Incentives Appealing to Data Center Investments
• Growth in the Digital Economy

Market Restraints

• Location Constraints Hampering Data Center Efficiency
• Power Challenges Crippling Data Center Operations
• Dearth of Skilled Workforce
• Increase in Carbon Emissions from Data Centers
• Data Center Security Challenges

Prominent Data Center Investors

• Actis
• Ascenty (Digital Realty)
• Angola Cables
• AVA Telecom
• Blue NAP Americas
• Cirion Technologies
• Claro
• Digicel
• EdgeConneX
• Elea Data Centers
• EVEO
• Equinix
• Gtd
• HostDime
• IPXON Networks
• InterNexa
• KIO Networks
• Mexico Telecom Partners
• Millicom (Tigo Panama)
• Oxygen
• OneX
• ODATA (Aligned Data Centers)
• Scala Data Centers
• SONDA
• Telecom Italia Sparkle
• V.tal
• Win Empresas

New Entrants

• Ada Infrastructure
• CloudHQ
• DHAmericas
• Layer 9 Data Centers
• Surfix Data Center

For more information about this report visit https://www.researchandmarkets.com/r/j0pby

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