Could Peru Be Latin America’s Next Datacenter Hub?

Could Peru Be Latin America’s Next Datacenter Hub?

Peru has never seen the same levels of tech industry activity as its regional counterparts, and the datacenter industry is no exception: When looking at their options in Latin America, providers typically have seen Peru as an afterthought – not as promising as the larger Brazilian and Mexican markets or the much stabler Chilean one.

Peru’s datacenter industry, however, appears to be at the cusp of a new age: As telecom providers sell off their facilities, making space for a wave of new industry players, international providers turn their eyes to Peru as a viable means of diversifying their regional presence. Could Peru finally become Latin America’s next datacenter hub?

The Peruvian picture

Peru is the fifth-largest country in Latin America in terms of population, behind Brazil, Mexico, Colombia and Argentina, being home to about 34 million people. The bulk of the country’s economic activity is centered on the capital city of Lima, with almost 10 million residents.

Peru is rebounding from the effects of the COVID-19 pandemic, after a 10% decrease in GDP for 2020, with a projected 11.7% increase for 2021, making it the fastest-growing economy in Latin America for the year. Peru also has one of the lowest interest rates in the region, at 2% as of November, even after a series of recent hikes by the nation’s Central Bank to combat inflation.

What is an AI Datacenter?

Peru’s corporate tax rate is set at 29.5%, which is in-line with tax rates of other countries in the region. The nation’s current political scenario is rocky but optimistic. The country saw controversial presidential elections take place this year, with left-wing anti-establishment candidate Pedro Castillo winning the popular vote and taking office in July.

Connected to multiple fiber assets, Peru holds unique strategic value to any datacenter provider active across several countries, providing significant connectivity options to the US and other Latin American locations.

The telco transformation

The leased datacenter industry in Peru has long been dominated by foreign telco providers with a broad presence across Latin America. At one point, those included Chile’s GTD group and Entel, Mexico’s Claro, Spain’s Telefonica, and US-based CenturyLink (now Lumen).

Since 2019, however, that dynamic has been changing, and the future role of telcos does not look as clear, as two of those providers have recently shed their datacenter assets in the region – Telefonica and Lumen. The two divesting parties could indicate an industry shift in which telco providers, typically huge multinational conglomerates that operate across multiple telecom verticals, are now seeing datacenters as less profitable assets, or simply ones that no longer fit with others in their portfolios.

A new dawn for its datacenter industry?

As the competition in other Latin American markets heats up, Peru is attracting the eyes of larger datacenter providers, particularly wholesale providers looking to broaden their presence in the region. ODATA, one of Brazil’s largest datacenter providers, announced that its was planning it first Peruvian site in 2021, and its main competitors, Scala and Ascenty, are likely to follow.

This newfound interest in Peru makes sense: After building out in major industry hubs like São Paulo, Santiago and Queretaro, these providers are considering smaller markets they might have previously overlooked. Due to factors such as country size, location and infrastructure, Colombia and Peru are likely the next in line.

Peru still has a long road ahead when it comes to its competitive landscape: It is a small market even by Latin American standards, with only a handful of providers operating most of the datacenters in the market. Nevertheless, the industry’s renewed interest in Peru, combined with the emergence of new players due to telco divestment, could indicate the dawn of a new age for its datacenter space.

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