Infratil has revealed details of two massive cloud computing data centres being built in Auckland's northwest: one at Hobsonville, the other at Silverdale.
An investor day presentation said a "$300m+ initial investment" was being spent on the twin data centres - dwarfing other local server farm efforts including IBM's $80m build in East Tamaki last decade, and Datacom's $52m overhaul and extension of four data centres last year.
The Hobsonville and Silverdale data centres are being built by Canberra Data Centres, 48 per cent owned by NZX-listed Infratil - which is loath to say the exact location of each build because of "security sensitivities."
Covid has fuelled a boom in working from home, which most pundits expect to persist beyond the pandemic. Remote working has been powered by cloud software services like Zoom, Slack and Microsoft Teams - which has in turn stoked demand for more data centres.
In Australia, CDC partners with Microsoft on its Azure regional server farms.
Recently, Prime Minister Jacinda Ardern confirmed Microsoft's plan to build a data centre in Auckland - making it the first of the Big Three cloud data centre players (the others are Amazon and Google) to announce a local build.
On September 16, the Overseas Investment Office gave Microsoft the green light for its Auckland build - the budget for which was not revealed, other than that it was above the OIO's $100m threshold.
Neither Infratil nor Microsoft will comment, at this point, on if they will partner on this side of the Tasman. But having physical infrastructure on NZ soil will help land clients worried about data sovereignty, and should give a performance edge over offshore alternatives.
Ground has been broken on the Hobsonville and Silverdale data centres, which are both fully consented, according to the investor presentation.
Hobsonville will be a 7000sq m facility, Silverdale around 11,000sq m.
Infratil says some 1200 people will work on each build at various times. On average, 250 will work on each site during construction.
Both are due to go live in 2022.
Data centres are power hogs and often classified by the amount of power they consume. Infratil says both Hobsonville and Silverdale will be "20 megawatts-plus" between them - and that they are part of a plan to more than triple CDC's capacity from the 133mw it has today across two server farms in Canberra and one in Sydney.
Infratil says the Canberra-based CDC decided NZ was a good investment opportunity because our IT sector is growing at $1 billion per year, according to Technology Investment Network data, and is now our third largest sector; the fact the "government has highlighted the importance of the tech sector to Covid-19 recovery with investment expected" and because "the Privacy Act 2020 strengthens privacy protections which will give precedence to secure and local data processing and retention".
From buses to 5G
Although better known for its earlier investments in the likes of power companies, bus operators and airports, Infratil has shifted toward high-tech investments over the past few years.
Infratil went 50/50 with Canada's Brookfield Asset Management to buy Vodafone NZ last year (both now own 49.9 per cent with small holdings having being allocated to executives including Jason Paris, Carolyn Luey and Lindsay Zwart).
And it has also developed a 100,000 customer-plus broadband business through Trustpower, in which it holds a 50 per cent stake.
CDC Data Centres has become the fast-growing segment of Infratil's business - and now the recent revaluation of its 48 per cent stake to $1.55b - a 70 per cent gain on last year's $889.2m (Infratil paid A$392m for the holding in 2016).
In FY2020, its share of CDC profit contributed $59.6m to Infratil's operating earnings, up from the prior year's $37.6m.
All up, Infratil's tech investments now generate close to half of Infratil's revenue, leading director Marko Bogoievski to describe it as a "data and connectivity company" at its recent annual meeting (read more on each division's financials here).
How Vodafone is faring
Today's investor presentation also took in the situation at Vodafone NZ amid the pandemic, reiterating themes from Infratil's recent AGM.
The telco will be "heavily disrupted" by the coronavirus in FY2021, it says.
The presentation puts the cost of Covid to Vodafone NZ at $29m as of September 20, in line with previous filings, as increased demand for broadband and mobile service is offset by the disappearance of lucrative global roaming revenue, the cost of providing unlimited data at no cost and an anticipated spike in bad debt.
The full FY2021 impact of Covid on Vodafone NZ is forecast to be between $60m and $75m.
The negative impact on roaming revenue is expected to run into FY2022 (that is, the financial year starting June 30, 2021).
The presentation also confirmed that fixed wireless access (FWA or landline substitution) would be a big focus of Vodafone NZ's ongoing 5G rollout - to the extent that potential FWA uptake will play a key role in determining the next areas where 5G is deployed.
Infratil shares were up 1.48 per cent to $5.49 in midday trading.
The stock is up 9.11 per cent for the year.