INETREIT set to hike capital by B3.2bn

INETREIT set to hike capital by B3.2bn

Tapping into growth of cloud services

Thitiwat Kornwuth, senior vice-president of Krungsri Securities, left, Mr Suttakarn, centre left, Mr Wanchai, centre right, and Varaya Imanotai, senior director of Bank of Ayudhya.
Thitiwat Kornwuth, senior vice-president of Krungsri Securities, left, Mr Suttakarn, centre left, Mr Wanchai, centre right, and Varaya Imanotai, senior director of Bank of Ayudhya.

INET Leasehold Real Estate Investment Trust (INETREIT) is planning its first capital increase of up to 3.2 billion baht for an additional investment in the rights of the INET-IDC3 phase 2, which is operated by local information and communication technology infrastructure provider Internet Thailand (INET).

The move is to cash in on the growth of cloud services in Thailand for digital transformation.

Thailand is becoming an investment battleground for global cloud data centre operators from the US, Japan, China, Singapore, Australia and India.

According to the Board of Investment (BoI), NextDC, an Australian data centre operator, received BoI approval for a 13.7-billion-baht investment in a new hyperscale data centre which will be located in Bangkok.

India-based CtrlS Datacentres (Thailand) Co also received the BoI's approval for a 5-billion-baht investment in a new hyperscale data.

As part of INETREIT's capital increase, the trust will issue not more than 174,476,000 trust units. It will open for subscription to existing unitholders who are individuals and juristic entities and the general public during March 11-14 at a maximum price of 9 baht per unit. Details of the final price will be announced at a later date on the Stock Exchange of Thailand's website.

The trust's main assets include INET-IDC3 phase 1, which is located in Saraburi province. INETREIT acquired leasehold rights to land and purchased office space and equipment at INET-IDC3 phase 1 from INET.

Suttakarn Naennar, managing director of Inet Reit Managament Co, which manages the trust, said INET-IDC3 phase 2, which has been operational since 2022, focuses on offering cloud services in the platform as a service and software as a service formats.

Phase 2 posted revenue of roughly 265 million baht in 2022 and 261 million baht during the first nine months of 2023, he said.

The trust will allow INET to lease the assets in the INET-IDC3 phase 2 it will invest in and such a lease would be on exclusive basis for a period of 30 years. The trust will adjust the lease fee for the project once a year by 2% on an annual basis.

Mr Suttakarn cited data released by Merlin's Solutions International that predicts Thailand's internet data centre market will record a compound annual growth rate of 5% during 2023-2027, reaching 91.7 billion baht in value in 2027, up from 76 billion last year.

The public cloud market in Thailand is estimated to record double-digit growth annually, with the market valued at 43 billion baht in 2023. The market is expected to be worth 88.7 billion baht by 2027.

Wanchai Vach-shevadumrong, INET's deputy managing director, also cited data released by Merlin's Solutions indicating INET had the largest share (12.7%) of the local cloud service provider market in the second half of 2022.

He said cloud data centre providers worldwide chose to invest in Thailand because the country has a lower rate of internet cost per population.

"Enterprise and global customers need to use multi-cloud providers to minimise risks and back up the disaster recovery site of their data," said Mr Wanchai.

He said he also sees continued demand for cloud data centre services as businesses need to reduce their costs and reduce their headcounts by increasing automation and accelerating digital transformation.

Mr Wanchai said INET has gained the trust of local enterprises and the government.

The company supports many projects including the e-tax invoice project, the Personal Health Record project covering 904 public hospitals, and the Universal Healthcare initiative. In March the company will launch the iClaim service for insurance claims with hospitals.

He said INET will focus more on offering platform as a service and software as a service, as well as open data and real-time data analytics that pave the way for the development of artificial intelligence in the country.

"Thailand needs to have self-reliance in terms of technology capability, not just rely on foreign tech as they can raise their prices. We should not become a technological colony," said Mr Wanchai.

By this year, INET expects to generate revenue of 2.4-2.5 billion baht, representing an increase of more than 20% over last year's income of 2 billion baht.

Mr Wanchai said the INET-IDC3 is now at phase 2.2, which is expected to run at full capacity within this year.

The company expects to launch INET-IDC3 phase 3 in Khon Kaen in the future at a cost of 2 billion baht.

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