RIL to buy 33% stake in Brookfield-Digital Realty data centre JV; stock rises

Reliance Industries Ltd shares opened in positive territory on Tuesday after the company announced its plans to enter the data centre business along with Brookfield Infrastructure and Digital Realty. The stock opened a gap up at ₹2,491.50 and surged to an intra-day high of ₹2,495.15 as compared to the previous session close of ₹2,491.50 on the BSE. The share has surged 4.16% in the past month.

RIL says it has entered into a pact to invest alongside "Brookfield Infrastructure and Digital Realty in their Indian SPVs (special purpose vehicles) set up for developing data centres in India".

RIL will hold a 33.33% stake in each of the Indian SPVs and become an equal partner, the company says. Kiran Thomas, CEO, Jio Platforms Limited, says the JV will help it serve enterprise and SMB clients with cutting-edge, plug-and-play solutions. "The unique and highly engaging consumer and home experiences that we are offering and further innovation, such as high-definition live content, AR/VR experiences, cloud gaming, immersive shopping experiences, and cloud PC have massive compute capacity requirements."

Digital Realty Trust, Inc. (“Digital Realty”), the largest provider of cloud and carrier-neutral data centre solutions globally with 300+ data centers across 27 countries, has a JV with Brookfield Infrastructure, which is developing high-quality data centres in India.

The JV aims to leverage Digital Realty’s industry-leading energy-efficient data centre platform design and operating procedures, Brookfield’s in-depth knowledge of the Indian infrastructure market, and Jio’s massive digital and connectivity ecosystem.

With this pact, RIL will become an equal partner in the JV, which will be branded as ‘Digital Connexion: A Brookfield, Jio and Digital Realty Company’. It is currently developing data centres in Chennai and Mumbai.

The JV’s first 20 megawatt (MW) greenfield data centre (MAA10), on a 100 MW campus in Chennai, is expected to be completed by the end of 2023. It recently announced the acquisition of 2.15 acres of land in Mumbai, to build a 40 MW data centre.

Arpit Agrawal, MD, head of infrastructure, India & Middle East, Brookfield, says data centres will provide essential services and critical infrastructure to support digitalisation in India. "Together with Reliance and Digital Realty, we look forward to providing the best of solutions."

Data center capacity in India is expected to increase multi-fold over the next few years. Indians are already amongst the largest mobile data consumers globally. This will further increase significantly with increasing access to various digital services like OTT platforms and gaming and the ongoing 5G roll-out. The adoption of 5G use cases by enterprises will lead to the adoption of data-intensive technologies like the internet of things (IoT) and artificial intelligence (AI).

Serene Nah, MD and head of Asia Pacific, Digital Realty, says India is a mostly untapped market for the data centre industry, which is driven by the rapid adoption of digital business models, the world’s largest population, and "a government that recognises the role of technology".