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MEXICO - Telecoms & IT

Jose Luis Friebel

Managing Director, DatacenterDynamics (DCD)

Bio

José Luis has been the Managing Director of DCD for Spain and Latin America for the past 16 years, with a proven track record in the B2B events and media industry. He is an expert in the Data Centers and Cloud infrastructure industry. He is a co-founder of The Game Changers Lab, as well as the founder and member of the Board of Directors of SPAINDC (Spanish Data Center Association) and the founder and Secretary General of MEXDC (Mexican Data Center Association). He holds a degree in Business Administration and Management from the University of Almeria and the University of Viadrina in Frankfurt Oder, Germany. He is also a Certified Professional in Foreign Trade from IMAFE. He began his professional career in the sales departments of various financial and insurance companies before later becoming a Sales Director. He is an expert in business development and strategy, sales, marketing, and team management, with a specialization in the Data Centers, digital transformation, and Cloud industry. He regularly participates as a speaker at data center and Cloud events and collaborates frequently with various specialized media. He is an influential figure in the data center and cloud industry in Spain and Latin America.

"Some of the bigger trends that we have seen in the data center sector globally are around renewable energy and strategies to improve energy efficiency."
TBY talks to Jose Luis Friebel, Managing Director of DatacenterDynamics (DCD), about digital infrastructure in Mexico, the data center industry, and plans for the coming year.
What challenges has DCD identified regarding the development of Mexican digital infrastructure?

Some of the bigger trends that we have seen in the data center sector globally are around renewable energy and strategies to improve energy efficiency as well as the use of hydrogen and in big projects even nuclear energy for data centers. We have also seen a growing tendency toward the automation of data centers through AI or robotics. There is a major focus now on attracting and retaining talent. Some of the biggest challenges for data centers is ensuring the best location for energy supply and having the engineers to build and operate that data center. Typically, energy costs do not affect most data centers because most of them have long-term power-purchasing agreements (PPAs) with fixed price over a number of years. However, many new data centers are being built under the new energy pricing, which is higher. Most data centers, 55% of the colo market in latam,, use 100% or as close to 100% renewable energy, and the industry is heavily concerned with sustainability and energy efficiency. Another major challenge has to do with talent, as there is a big need for talent in the tech and data center area and this is global. Data centers are growing rapidly, and we are seeing various announcements regarding new investment, which means we will require many people to design, build, and operate them. To combat this deficit in tech talent, DCD Academy alongside MEXDC is launching a program to train young talent in the industry and giving them the option of doing internships in the data center industry. Mexico is one the biggest countries worldwide in the data center sector, and investment in this infrastructure is growing exponentially. This is largely due to digital transformation and the development of technology in the country here. Data centers are growing rapidly in Querétaro, and globally Querétaro is the 50th fastest-growing data center locations, the first time a city in North America besides the US or Canada is appearing on this list of data center regions. Some of the factors that have helped Mexico consolidate its position as a rapidly growing data center hub is the presence of legal flexibility, being located so close to major telecoms hubs in the US, lower building costs, strong commercial relationships with the US, as well as significant potential for American companies to open up data centers in Mexico. As a result, there have been various announcements from hyperscale and cloud service providers planning to open operations in Mexico. We are seeing growth in Mexico City, Guadalajara, Manzanillo, Monterrey, Nogales, and Toluca, though Querétaro is truly the star at the moment in terms of receiving investment. In the last few years, over USD2 billion has been invested in data centers there, and 60-65% of the country’s data center capacity sits in Querétaro. Its government is working hard to bring in investment. It has excellent weather there, close proximity to Mexico City, no earthquakes, and great telecoms and electric connections; however, there is a need for more power, which the Querétaro government is working on to meet demands from industry and the data center sector. An average annual increase of over 10% is being predicted in the data center industry in Mexico between 2023 and 2027, mostly due to the adoption of the cloud, the implementation of AI, the IoT, big data, and the overall digital transformation. Companies like Microsoft, Kio Networks, Oracle, CloudHQ, Odata, Ascenty, Equinix, Scala and Amazon are planning to invest MXN50 billion in the country. However, there are challenges here such as the bureaucracy and the requirements and red tape to get building permissions in some areas. It can take a long time in some places. It can also be difficult to find a suitable building contractor or access the equipment. We need to increase the manufacturing of equipment and batteries here to make it cheaper than bringing them in from the US. Access to clean energy is also not that easy at the moment, so we need to see a change in regulations. There are also some issues around security, crime, earthquakes, cybersecurity infrastructure, and others that Mexico must face in order to grow faster.

What distinguishes the real estate aspect of the data center industry from other types of construction projects?

The data center industry is part of real estate, though it is a real estate investment that is extremely specialized. and requires a high amount of energy as well as specialized design and building along with the operation of IT equipment. There is currently a high amount of real estate investors who think it is easy to find clients. There is demand, though they need to find the right client. If they go wholesale, they need to go through no more than six hyperscale cloud service providers to really sell the space. If they do not specialize, certain companies will not give them contracts for the cloud.

What are the key components of DCD’s business operations, and how has the company grown in terms of revenue, profit, and expansion in Latin America?

DCD is an information platform for the data center sector. Our headquarters are based in London, and we have an office in Spain working for Latam for the last 16 years and 25 globally. In total, we have about 130 employees in the US, UK, Spain, Mexico, Brazil, and Singapore. We are the most visited website with over 8 million visits in 2022 in three languages: English, Spanish, and Portuguese. We expect over 12 million visitors in 2023 . We have three business units, with the first being content and digital marketing, with digital publicity, DCD Broadcast, and virtual events. Another business unit works on face-to-face events with the brand DCD Connect, while the third focuses on data center professional training with our DCD Academy. Globally We earned around USD25 million in 2023 with a 30% EBITDA profit. We are experiencing significant growth right now and are working on the acquisition of new companies to grow our portfolio in different sectors beyond data centers though still in digital infrastructure. We are also planning to launch new branding related to digital infrastructure and not just data center infrastructure. Latam represents around 25% of our global business and has grown significantly in the last few years. We grew in Latam from USD2 million Revenue in 2020 to USD6 million in 2023 as well as a jump from 20 employees to almost 40 in the same time period.

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