Best Data Center Energy Price Ever

It's not the first time I have witnessed a frenzy of investments in the Telecom Infrastructure space. I was right in the middle of it last time it happened in the submarine cable space. So when I was invited to go and speak in Riyadh, I was really excited and wanted to witness first hand if all the hoopla was real. Frankly speaking I had my reservations as I had first hand also witnessed the Telecom crash of 2000. Especially so when every fifth investor I met was talking about a $5 Billion investment in data centers. And I met a lot of them.

So while having my fourth cup of Arabic tea on the first day and talking to random people, I heard almost in a hush hush voice of a man who is a legend in Saudi Arabia -- because he closed a data center energy deal at 1.04 cents/KwH. Let me repeat that so you do not think it is a typo. 1.04 cents/KwH. Of course I don't blame you for asking for proof. Here it is.

So I had to meet this guy but nobody was willing to reveal his name. But I persisted and got his contact details. Texted him saying I wanted to meet him. Of course he was busy. But I have experienced this before. So I was persistent. He said he was out of town. I told him to tell me where and I will come over. He said No. Basically I told him that I had a visa for 6 months and I was not leaving town until I met him.

So I got a meeting at his office the next day at 10am. Let me describe his office. The building has no name yet it is right in the middle of the most important government ministry building complex in Riyadh. A non-descript office on the 13th floor. A 20 minute meeting lasted for an hour and a half. This is the most powerful person in Saudi Arabia in the project finance area. I don't think he has a budget. He said he will look at any DC deal in Saudi Arabia no matter what size. And he was seeing a lot of them. And like a lot of powerful people, he was one of the most humble person I have ever met. This is not the last time I will meet him for sure. I made a friend.

Back to the conference. Every speech was gung-ho about the data center business in Saudi. And why not? While the one deal I mentioned was most likely a one-time deal, energy prices are the lowest in the world, land is practically free and Income Taxes for Data Centers are 5%. But if that is your headquarters, it is Zero.

I was the only person among all the speakers who was almost a party-pooper as I mentioned the word Connectivity. To my surprise nobody brought it up except Nokia which of course wants to sell its gear. So this is the deal: I told the audience that while AI Data Centers had the potential to bring in almost a trillion dollars of investments in the next decade split between the Middle East and India, there were three pillars that had to be very strong: Connectivity, Energy (Availability and Price) and Real Estate.

And given that Saudi Arabia is flanked by two monster ransom-seekers on both sides of the Red Sea, this is where they need to focus on if they want to replace oil with data as their main source of income. And not one to just talk about problems without giving solutions, I did place my solution in front of almost 20 Saudi Ministry officials. It is not an easy solution. And they will have to go out of the way to resolve the issue. And it will be tough. And politically messy. And it is not a cheap solution.

But the good news is, this is a solvable problem. And I am more excited than ever for Saudi Arabia. This frenzy is real and it will make Saudi Arabia the ultimate destination for data centers in the world. Now is the time to go there and place your flag while the deals are still doable.