The factors that could propel Paraguay’s datacenter segment

A small landlocked economy with no access to subsea cable systems, Paraguay still has potential to attract certain datacenter investments.

Over 80% of the country’s abundant and stable energy supply comes from renewable sources like hydropower and biomass. And steady and sustainable supply is key for modern datacenter projects.

Although still trumped by demand, datacenter players deem the energy factor increasingly relevant when making investment decisions.

The interconnection of Paraguay’s economy with that of its neighbors in data connectivity, trade and energy is also an advantage, as hydropower dam projects share energy with major markets such as Brazil and Argentina. 

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In a June report, market research firm Aritzon said Paraguay could see around US$400mn in datacenter investments by 2027. 

According to the company, the compound annual growth rate (CAGR) is expected to reach 12.8% in the next five years, achieving a value of US$88.5mn.

“The market has a wide opportunity for investments from colocation and telecom datacenter operators owing to government initiatives, availability of green energy, and growing digitization,” wrote Aritzon.

Investment and growth figures are small compared to Latin American datacenter powerhouses, but considerable for an economy the size of Paraguay’s, which is underserved in terms of datacenter infrastructure.

Demand is expected to increase in sectors such as agriculture, cloud, IT & telecom, and government, according to a report by Research and Markets.

The financial sector and healthcare are also expected to fuel demand for retail colocation, according to Research and Markets. 

Paraguay’s free trade zones could further drive investments, as they offer benefits such as tax exemptions or custom duty exemptions for imports by local organizations, the report said.

The government wants to strengthen the market with its National Agenda 2030 and the personal credit data protection law, among others.

“The government is also working towards improving inland connectivity with the establishment of a national fiber optics network,” Research and Markets wrote.

Paraguay has 18,000km of fiber optics deployed at present.

As BNamericas reported, the project is part of ICT ministry Mitic's digital agenda and is centered on the unification of four fiber infrastructures that have operated independently. They belong to state-owned firm Copaco (180,000km of fiber), state-run power utility Ande (120,000km) and the ministries of the interior (200km) and finance (74km).

According to Copaco, fiber optics coverage reached 300 neighborhoods in 33 localities in June. In total, the company has over 40,000 fiber optics connections, having invested US$500 per home.

During 2021, Copaco deployed 3,700km of fiber optics, up 54% compared to the previous year

SMALL SCALE AND EDGE

Most of the country’s datacenter projects are new ones and involve small and mid-scale sites.

“The Paraguay datacenter market is dominated by greenfield construction. In addition, the market is witnessing the development of several on-premise, mostly modular, datacenter deployments. The predicted growth of edge and MDC [mini datacenter] facilities will boost revenue for construction contractors in Paraguay,” Aritzon wrote.

Many edge datacenters improve domestic internet penetration, while also delivering content through core datacenters in Brazil.

On the other hand, major datacenter projects are not on the horizon, as demand from large cloud providers is non-existent. 

“Economy, population size, how connected it is and the ability to serve the market with low latency from elsewhere are all factors that large cloud providers take into account. And it is possible to serve Paraguay, Uruguay, through Brazil and other regions,” Ascenty’s COO Marcos Siqueira, told BNamericas.

Ascenty is the largest colocation datacenter group in Latin America, with 22 sites in operation, most of them serving global cloud providers.

“Paraguay is not a target market for us right now. We also haven't heard big cloud and technology companies talking about the country as a target market for the moment,” Siqueira added.

According to Research and Markets, though, storage locations established in the country by cloud providers such as Microsoft and Google are seen as further driving investment by these players in the market. 

PLAYERS

Players such as state utility Ande and Asunción city hall have invested in on-premise infrastructure from January to May, according to Aritzon.

The main private players in the local datacenter market are telecom operator Millicom (Tigo) and IPXON Networks. 

Tier 3-certified, IPXON’s datacenter is in Asunción and offers colocation, VPS servers, proxy, managed services, backup and IT consulting, among others.

Located in the municipality of Villa Elisa, Tigo’s datacenter is also Tier 3-certified and has a capacity of up to 220 racks to serve its corporate clients, “which makes it extremely competitive with other brands and provides high-end technological support to all Tigo business users,” Tigo said on its website.

The company offers colocation, virtualization, backup and virtual office solutions from the site, among others.

As of December, Millicom had 12 Tigo datacenters across Latin America, eight of which are certified according to international standards. 

The datacenters are in Guatemala, Honduras, Panama, Colombia, Bolivia and Paraguay.