Netmagic to invest Rs 2,000 cr in 3 years to set up more data centres

The data centre operator opened its largest ever centre in India in Mumbai today

Data centre operator Netmagic, a subsidiary of Japanese firm NTT Communications, is planning to invest close to Rs 2,000 crore in setting up three more data centres across India in next three years as it sees demand rising up in tandem with fast adoption of information and technology (IT) among local and global enterprises.

"We are planning to set up three data centres each in Mumbai, Bangaluru and Noida with a total floor size of about 700,000 square feet in next three years. The total investment including cost of building and white space (area occupied by servers) would be around Rs 2000 crore," said Sharad Sanghi, managing director and chief executive officer of Netmagic.

The firm today opened up its ninth data centre in Mumbai, which is said to be biggest ever data centre in the country. The new data center was primarily funded by NTT Communications, which paid Rs 570 crore last year to increase its stake to little above 81 per cent in Netmagic, up from 76 per cent in 2012. Netmagic today said total investment in the new data centre including cost of the building was Rs 700 crore.

"Our new data centre was sold almost 40 per cent before it went live. We hope to sell all space within 18 months from now," Sanghi added, indicating growing demand from enterprises as they tend to offload IT services to a secure, third party locations.

Many large e-commerce players and big media networks have hired data center services of Netmagic. The firm is looking at banking and insurance firms as their customers for its new facility.

Japan-headquartered NTT, which has invested in Netmagic, said it is betting big on India to set up more data centers as it not only has cost effective land and power supplies, but also desired human resources who can take care of everyday IT need of companies whose core operation is not IT or telecommunication.

"We are not considering any acquisition in data center space in India. We are ready to expand our size in India though Netmagic only," said Tetsuya Shoji, President and CEO of NTT Communications.

Globally NTT has over 140 data centres across several continents and plans to open up more data centres in United Kingdom, Japan, the United States as well as India as it has been scaling up its capacities to attract more customers.

NTT competes with Microsoft, IBM and Amazon who have either data centres in India or are in the process of setting up taking the cost advantage here.

Since NTT already has nine data centres in India, to facilitate seamless contact among facilities, the firm has applied for a national long distance call license earlier this year and is expecting to obtain it by end of 2015. In future, it also plans to apply for international long distance call license to facilitate calls between Japanese companies who hire Netmagic space to run their data operations.

"The call licences would be for business purposes only and not for consumer oriented," said Shoji.

Tata Communications, the only domestic player which competes with Netmagic in offering data center services also has long distance call licenses which is used by several telecom operators in India.