Digital infrastructure sits at the heart of the modern economy. Data centres are a critical part of that infrastructure. They will grow as more and more organisations go through digital transformations and move to cloud-based computing.
“AI is a key part of this, it requires more services and more processing than traditional computing applications and most of the heavy lifting for that will be handled by data centres.
“We already own data centre assets and have done so for a long time,” says Hodson.
“We have around a 25% share of the local market. This year we laid out our development pipeline for the first time and that for a total of about 118 megawatts.
“The New Zealand market is set to grow, we think it will be about 500 megawatts by 2030 which will leave us with a material share of a large, growing market”.
To put these numbers in context, today’s total market sits at around 90 megawatts with Spark operating around 22 megawatts with another megawatts under construction.
Expansion plans
Spark’s data centre expansion plans are well advanced. To build new capacity you need land, resource consent, fibre connectivity and power.
Hodson says Spark has three strategic sites in Auckland. It also has the necessary relationship with the power sector including Transpower and Vector: “We have a 10-year power purchase agreement with Genesis Energy which underwrites 60% of our current energy usage, this is with the Lauriston solar farm in Canterbury”.
Renewable energy is set to play a major role as Spark expands its data centre operation.
Says Hodson: “We want to grow our business, but we need to separate business growth from emissions growth.
“Our biggest source of emissions is electricity, that’s both from a mobile network perspective and from a data centre perspective.
“Investing in existing renewables doesn’t do much to change our emissions, but investing in new renewable sources helps.”
The move to greater use of renewable power also helps Spark’s data centre clients meet their emissions goals.
Data centres are a natural fit with Spark’s wider business. Like the core business of fixed telecommunications networks and mobile networks, data centres are a form of digital infrastructure.
“You can go up a layer where there are products and services all sitting above the digital infrastructure they need to work with.
“Infrastructure is something we’ve always had a focus on in terms of the core. There are some other services that are complementary, such as Cloud Collaboration. You get different returns in different parts of the business.
“There will always be choices for us about whether we are getting appropriate returns and whether they made sense. Do they continue to make sense over time?
IoT is another digital infrastructure that fits into this picture and it is also fast growing.
“It has grown to around 10 times as many connections as we had when we started five years ago. It’s around solving problems and has a particular role to play in sustainability. It can deliver information on water compliance so you can understand how you are using the natural resources and whether you are meeting the requirements of different legislation. It has become a much bigger part of our business.”
Hodson says the company’s data centres have international customers as well as local ones.
Much of that comes back to AI’s seemingly insatiable appetite for processing and data storage.
AI already plays an important role for Spark. “We’ve been using it for a long period of time, particularly in our marketing and with the customer-focused parts of our business but we also see it playing a role supporting various areas of the organisation. We find it has the ability to turn up information very quickly, it means we can help customers faster and get better outcomes.”
She says in the four or five years since Spark began investing in its AI capability the technology has made dramatic changes in key areas: “With customer retention, we can make the right offers. We have a tool called made-for-you, which looks at a customer’s usage across all services. It considers all the plans a customer currently has and determines if that is the right mix, and then it gives recommendations on the back of that information. We delivered that last year and customers have been using it. It gives them a better service, but it also helps us better understand a customer’s needs.”
