Philippine conglomerate SM Investments Corp., a prominent player in the Sy family business empire, has announced its strategic decision to exit the data centre sector. The company plans to divest its interest in YCO Global Cloud Centres, a move that has raised eyebrows in the industry.
SM Investments’ president and CEO, Frederic C. DyBuncio, pointed to the country’s soaring electricity prices and their relatively small stake in YCO as significant factors influencing this exit. Just a year ago, the company increased its investment in YCO from 10 percent to 18 percent, making this recent withdrawal a notable turnabout. “Right now, we are not really focused on data centres because, from our perspective, power costs are very expensive. The small minority we have in the data centre business, we’ll probably sell that eventually,” DyBuncio revealed in comments reported by the Philippine Star.
As the market dynamics evolve, DyBuncio highlighted that major global hyperscalers are increasingly favoring locations like Malaysia and Vietnam. These countries present not only lower power expenses but also a reduced risk of natural disasters, making them more attractive for large-scale data operations. It’s a classic case of “the grass is always greener”—but in this instance, it’s clearly rooted in more affordable energy and operational stability.
YCO Global Cloud Centres specializes in developing and operating sustainable, carrier-neutral data centres across the Philippines. Its focus on creating eco-friendly infrastructure shows promise, and while SM Investments steps back, the future of the company may yet remain bright in a region that increasingly demands digital solutions.
What led SM Investments to exit the data centre business?
SM Investments decided to move away from the data centre sector primarily due to high electricity costs in the Philippines and their relatively small stake in YCO Global Cloud Centres.
How significant was SM Investments’ previous investment in YCO?
Just a year prior to its exit announcement, SM Investments increased its stake in YCO from 10 percent to 18 percent, highlighting a rapid shift in strategy.
Why are major hyperscalers choosing Malaysia and Vietnam over the Philippines?
Major hyperscalers prefer Malaysia and Vietnam due to their lower power costs and reduced risks of natural disasters, making these countries more appealing for data centre operations.
