Telcos co-locate network infrastructure as hyperscale data centres expand in SEA

Enterprise AI adoption drives demand for these facilities.

Telecommunications companies in Southeast Asia are increasingly co‑locating network infrastructure in hyperscale data centres to respond to growing demand from artificial intelligence (AI) workloads.

Speaking at the Asian Telecom Summit 2026 in Singapore in February, Dustin Kehoe, service director for Asia Pacific at GlobalData, said the region is witnessing a surge in large-scale data centre builds, particularly to host AI workloads.

“We track every data center build in the world that's valued over $20m,” he said, noting that hyperscale data centre construction is occurring across the region, particularly in Malaysia, Indonesia, the Philippines, and Thailand, whilst Singapore is seeing fewer such developments.

Telcos are working with hyperscale cloud providers to co-locate network infrastructure in these facilities, allowing faster integration of network and computing resources to support AI applications.

“There’s a telco partnership, where the telcos will want to co-locate their super POPs [point of presence] into these facilities, to be in the right Google Cloud, or the right availability zone to serve their customers,” Kehoe said.

“We do see a lot of telcos get involved in network as a product, or network as a service, co-located on a cloud availability zone to create instantaneous global coverage, and there's lots of interesting models that are happening,” he added.

The investments are driven by AI technologies that require high-capacity computing. Traditional data centres are being redesigned to handle dense GPU [graphics processing unit] configurations, new power strategies, and advanced cooling systems such as liquid cooling.

Kehoe noted that enterprise adoption of AI is expected to drive further demand for such infrastructure.

“Enterprises need to go from proof of concept to scaled AI deployments,” he said. “If enterprise adoption goes to where it needs to be, we’re actually doing a 4.6% ROI [return on investment].”

Beyond data centre co-location, telcos are exploring AI applications in automation, cybersecurity, and digital supply chain management to meet evolving business and customer needs.

“We think the winners are those that are going to really be embracing AI,” Kehoe said. “And the losers will be what some people call in Southeast Asia the 'smart follower,' or they sometimes say the second mouse gets the cheese.”