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With Singapore & Telefonica deals, Amazon consolidates its cloud dominance further

Amazon Web Services declared a partnership with the Singaporean government, businesses, and public sector organisations to help hasten the adoption of generative AI and AI in Singapore

According to a statement from Amazon Web Services (AWS), the company intends to invest USD 12 billion over the next four years to expand its cloud computing infrastructure in Singapore.

The investment brings the company’s total planned expenditure to more than USD 23 billion by 2028, according to a statement from AWS. This brings the total amount invested in the Asia Pacific Region to USD 11.5 billion up until 2023.

Top executives in Southeast Asia are vying for a larger share of the global technology market. Nvidia CEO Jensen Huang visited Malaysia, Vietnam, and Singapore in December, and Apple CEO Tim Cook visited Singapore, Vietnam, and Indonesia last month.

Apple has announced plans to invest over USD 250 million in its operations in Singapore, one of its recent investments in the region.

In a statement, AWS also declared a partnership with the Singaporean government, businesses, and public sector organisations to help hasten the adoption of generative AI and artificial intelligence (AI) in Singapore.

“AWS is doubling down on its cloud infrastructure investments in Singapore from 2024 to 2028 to support customer demand, and help reinforce Singapore’s status as an attractive regional innovation launchpad,” AWS Country Manager Priscilla Chong said, Reuters reported.

Amazon’s latest move in its plan to develop AWS infrastructure throughout Southeast Asia was announced at the AWS ASEAN Summit in Singapore.

Earlier, the company declared that it would invest USD 5 billion in Thailand and USD 6 billion in Malaysia.

Days prior, during a visit to the region, Microsoft CEO Satya Nadella declared investments in cloud services totalling USD 2.22 billion in Malaysia and USD 1.07 billion in Indonesia. This announcement was made by Amazon.

The 670 million people in Southeast Asia are young and tech-savvy, and this has attracted the attention of tech giants.

In December 2023, Reuters revealed that YTL, a Malaysian conglomerate, had entered into an investment deal with Nvidia worth USD 4.3 billion to develop AI infrastructure.

As per a report by the state news agency, Google’s investment plans in Malaysia were revealed by Tengku Zafrul Aziz, the trade minister. An announcement is anticipated “in the near future.”

Apart from Singapore, AWS has now broken into Europe 5G networks with a strategic cloud deal with Telefonica Germany, a move which will further solidify the American venture’s foothold into the global telecoms market.

While some telecom networks have moved IT and other non-core operations to the public cloud, the move by Telefonica’s German subsidiary will be a global first where an existing mobile operator is switching its core network to a public cloud network.

Big cloud-computing services firms like Amazon and Microsoft have been attempting quite hard to move more into the telecoms sector, lured by the prospects of making billions of dollars in revenue, but operators have been wary of the capability of public clouds in handling a mobile network. However, Telefonica’s move will likely help in the changing of the scenario.

“I want to see it working for at least one to two quarters and have a roadmap to move at least 30-40% of my customer base by 2025-2026,” said Mallik Rao, Chief Technology & Information Officer at O2 Telefonica, also known as Telefonica Germany.

“The company has 45 million customers in Germany. The core network, which consists of high-performance servers in data centres, is the heart of a mobile network that securely routes data and calls at high speeds. A public cloud will cut costs, increase scale and allow repairs to be done without service disruption,” Reuters reported further.

United States-based Dish, in 2021, became the only telecom company to use AWS cloud for its core network. Now Telefonica has become the latest entrant into the club.

“Dish was much easier because they had no existing systems that had to be modified to work with the cloud,” AWS vice president Jan Hofmeyr told Reuters.

Nokia, which also worked with Dish, will provide the software and AWS will provide its infrastructure for Telefonica.

The global telecom cloud market is expected to reach USD 108.7 billion by 2030 from USD 19.7 billion in 2021, thereby making the sector a growth driver.

“We want to make it a business to run telco workloads,” AWS’ Hofmeyr said, adding that the company expects more deals with other operators in the next 12 months.

“I would say in most cases the discussion is about timing versus should we move into the cloud,” the senior official concluded.

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