Telenor takes on hyperscalers with new cloud venture

Telenor has teamed up a with a renewable energy specialist and a venture capitalist to launch a new company that will secure sensitive data on behalf of Norwegian enterprises.

The new venture aims to meet the growing demand from government and corporations for data sovereignty, and will build three brand new data centres in Oslo – with a combined capacity of 40 megawatts and at a cost estimated by Telecoms.com to be several hundred million dollars – expressly for this purpose.

Telenor will bring to bear its expertise in telecoms and IT infrastructure. It has been joined on this new adventure by an all-Norwegian cast comprised of renewable energy firm Hafslund, energy-focused investment firm HitecVision and the Norwegian office of consultancy Analysys Mason.

Based on what was shared in the press release, the new venture doesn’t appear to have a name yet, but Telenor has shared precisely how much of the company each partner will own: Telenor, Hafslund and HitecVision will each have stakes of 31.667%, while Analysys Mason will own 4.999%.

“Backed by Norwegian-managed capital, this partnership will help resolve a significant issue in an increasingly digital society,” said Telenor CEO Sigve Brekke, in a statement on Monday. “Norwegian security authorities have requested the establishment of data centres and cloud services for sensitive information, functions and infrastructure of importance to national security interests in Norway. By creating this company, we are facilitating that sensitive data across sectors is stored and delivered safely on Norwegian soil.”

Indeed, fuelled by fear about the potential for Chinese tech firms like Huawei and ZTE to snoop on sensitive comms traffic, enterprises and governments are paying more attention than ever before to where their information is stored, and on whose networks it travels.

Just last week, the EU updated its guidelines for assessing the security of so-called high-risk (i.e. Chinese) 5G vendors, putting more pressure on Member States to avoid using their products. The decision was met with stinging criticism from Huawei.

“Data centres are, in many ways, the digital heart of any business. This is where the data flows to and from, which involves high quality, security and energy efficiency requirements,” said Brekke on Monday. “Together with Hafslund and partners, we will now establish Norway’s most secure commercial data centre operator, with a strong focus on sustainable solutions.”

Telenor didn’t say how much will be spent on the new facilities. However, according to an index compiled by commercial construction consultancy Turner and Townsend, Oslo is one of the more expensive places to build a data centre, with costs in 2022 coming in at around $9.50 per watt. By comparison, Zurich is the most expensive on this index, costing $12.36, while Mumbai is cheapest at $6.00.

So, with three data centres weighing in at a total of 40 MW, Telenor’s venture could be looking at total build costs of around $380 million. Bear in mind that this is based on figures from last year, so the full effects of this year’s inflation may well push that figure upwards. Construction of the first one is due to begin towards the end of this year.

This new business pits Telenor against the big three hyperscalers – Amazon Web Services (AWS), Microsoft Azure, and Google Cloud – which all either operate or have announced plans to launch cloud locations in Norway. Having said that, there is nothing to stop Telenor from hosting services from these three in its new data centres, and it can leverage the value of its Norwegian brand to appeal to local companies. When sovereignty is the order of the day, this could make all the difference.

Telenor didn’t reveal any launch customers, but said the new sites will provide colocation facilities for “several tenants.” Interestingly though, the telco said the venture will not allow anyone to use their new data centres to mine cryptocurrency.

Bitcoin in particular has attracted a lot of criticism lately for the amount of power it consumes, and so allowing crypto mining would presumably make it more challenging to operate the new data centres efficiently.

Indeed, as Brekke mentioned, the new venture places a heavy emphasis on sustainability as well as security.

This is Hafslund’s area of expertise. It is Norway’s second-largest energy producer, owning – wholly or in part – 80 hydroelectric power stations across southern areas of the country. Heat generated by the servers will also be reused for other purposes, like heating surrounding properties, for example.

“Establishing these data centres will be an important contribution to enabling Norway’s green transformation and digitalisation,” said Finn Bjørn Ruyter, CEO of Hafslund. “With solutions to reuse excess heat, the data centres will free up power consumption for heating and thus provide energy-efficient solutions necessary to reach Oslo’s and Norway’s climate goals.”

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