Hyperscale datacenters: How NextStream aims to be the next big thing

NextStream, a company created by UK-based investment fund Actis following its acquisition of Telefónica’s Latin American datacenter business, is looking to move into the hyperscale datacenter segment as its next chapter.

The company just appointed Serafim Abreu Jr. as new CEO with one of his mandates being to make inroads into this segment. It also has bolder plans, including even more robust datacenters, such as those focused on artificial intelligence (AI) processing and machine learning.

“Our investment potential is significant,” Abreu Jr. tells BNamericas about Actis’ investment resources for NextStream. 

In this interview, the executive reveals the details of ongoing projects, the group’s upcoming plans and talks about market opportunities, Argentina and AI.

BNamericas: What are your plans for leading NextStream? What is the company aiming for?

Abreu Jr.: NextStream was created at the end of 2023 when Spain's Actis Private Equity acquired another Spanish investment fund, Asterion.

Before that, the company was known as Nabiax, which was a carve-out of Telefónica’s datacenters. Telefónica executed the carve-out at the end of 2018, and Nabiax operated the datacenters until the end of 2023.

NextStream officially started in early 2024 with a clear purpose: not just to continue operating in the wholesale segment – where we have a strong partnership with Telefónica, both as a client and distributor – but to take on the challenge of entering the hyperscale market. Throughout 2024, we prepared ourselves to compete in this space.

BNamericas: What’s changing for NextStream?

Abreu Jr.: It’s a completely different business. Hyperscale customers aren’t typically based in the countries where we operate; they’re outside those markets. The sales process is far more complex and specific compared with retail or wholesale.

In 2024, we focused on enhancing our assets by upgrading the datacenters we acquired. We’ve been addressing obsolescence, performing maintenance and building new sales channels for the local market.

At the same time, we’ve been preparing the company to compete in the hyperscale league. My goal is to position the company to serve these players in the best way possible in a market where you have your customers outside the country, whether in Brazil, Mexico, Chile, Argentina or Peru [where the 11 datacenters acquired from Telefónica are located].

They are interested in establishing their public clouds and availability zones in Latin America. And we're going to serve this group in a first wave.

BNamericas: What would the second wave be?

Abreu Jr.: The second wave is to serve these same hyperscalers, but meeting the demand for artificial intelligence and machine learning.

These are datacenters that are much denser than a cloud datacenter, with a much greater computing capacity. The rack density goes from 14-16KVA to 60-70KVA per rack.

The good news is that we’re in a region that has clean, abundant and cheap energy.

Given that artificial intelligence and machine learning datacenters don’t need to be as close to the consumption zone as the cloud datacenter, this is a great opportunity. And Brazil, in particular, is very well served because of connectivity and submarine cables.

We could have a datacenter in Fortaleza, a datacenter in Piauí [state], in other places where there isn’t such a high density and demand for cloud.

So we’re readying ourselves to play on these three fronts: wholesale, cloud hyperscale and AI/machine learning.

BNamericas: Let's take it one step at a time. Regarding the current datacenters, which came from Telefónica, have you already upgraded them?

Abreu Jr.: We’re in this process. We spent 2024 working day and night to upgrade these datacenters, leveling up certifications, increasing security, redundancy and other aspects.

We’re approximately 30% through this process. But this is a three-year project, and we’ve made sequential investments in the 11 datacenters.

BNamericas: For hyperscalers, is the idea to use these existing datacenters as the basis or to build new ones from scratch?

Abreu Jr.: The datacenters for the hyperscalers will be separate datacenters. Those that we acquired are very good – they were state-of-the-art at the time, but today that’s not the case. Today, you have other technologies, in the cooling area, for example, which no longer use the amount of water that was consumed in the past.

The datacenters are cooled with very low water consumption, while others are being developed to use liquid cooling.

In short, we’re creating new datacenters.

BNamericas: And how is this process progressing?

Abreu Jr.: At the end of last year, in 2024, we signed with a hyperscaler for a datacenter in Mexico. We closed our first contract and we already have several prospects in our pipeline.

I can't reveal the client, but it’s a greenfield project, a new datacenter that we’re starting from scratch and which we intend to deliver in January next year.

BNamericas: That’s a relatively short delivery window. Is the land ready, structured?

Abreu Jr.: The land is structured. We’ve already started the earthmoving and we have a scope defined for the civil construction, then the installation and comissioning.

BNamericas: Where is it located, in Querétaro?

Abreu Jr.: It’s very close to Querétaro. Querétaro has become a hotbed of datacenter opportunities. But we decided to move to a nearby city because since Querétaro has had this boom, there’s a lot of competition for energy consumption.

BNamericas: Has the energy part been sorted out? Have you already contracted it and do you have all the licenses?

Abreu Jr.: Yes. Everything is ready. I can't disclose how much capacity we’re going for, but it’s the capacity of a cloud datacenter, meant for an availability zone of this particular client, in a phased delivery.

BNamericas: Is the contract with this hyperscaler extendable to other markets or is it limited to Mexico?

Abreu Jr.: It’s extendable to other markets. The contract, the terms and conditions are valid for other markets. Now, the demand is specific in each market and it depends on the client's strategy, on where they prefer to put the capacity to work.

But this particular client is a client investing a lot in Latin America.

BNamericas: Is it a new entrant?

Abreu Jr.: No. This is an existing player in Latin America, with a strong appetite to invest in the region.

BNamericas: We’ve seen a lot of datacenter companies moving to enter the hyperscale segment, which has some well-established providers. On the other hand, there aren’t necessarily so many large tech companies, hyperscalers, in the market. Is there demand for everyone?

Abreu Jr.: There is. What we’ve observed now in this second wave after the pandemic is that, given that the market has stabilized both in terms of providers and clients, investments are being made in a very structured way.

Hyperscalers don’t necessarily always choose the same provider for their new projects. Furthermore, there are many companies migrating to the cloud, the cloud market is constantly growing.

Now, this new demand that is coming with AI is still a bit uncertain for us.

BNamericas: Why?

Abreu Jr.: Where are we going to put a 100MW or a 200MW datacenter for machine learning or artificial intelligence? In São Paulo? São Paulo is extremely saturated, and I don't need to be close to the demand.

Ultimately, it's a strategy that hinges a lot on the client, on where they want to put this datacenter, and it depends a lot on the opportunities. 

We've been talking a lot with the ZPEs [export processing zones]. I think this is really an opportunity to reduce the cost of all the investment that’s being made [in datacenters for AI, machine learning].

Eventually, if we manage to get exemption from export taxes on services for datacenters, I think Brazil will really enter the global map for artificial intelligence datacenters because you'll have renewable energy, clean energy, a team that knows how to operate, exemption from taxes on capex and exemption for the export of these services.

We'll be able to put the pin on the map and transform Brazil into a major global service provision center.

BNamericas: What other countries are you looking at in Latin America?

Abreu Jr.: We’re looking at all countries, but mainly where we have a presence: Brazil, Mexico, Chile, Argentina and Peru.

We want to look first at our own backyard, there are plenty of opportunities in these markets. We know how to operate in these countries, we know how to buy land, we know how to buy energy, we know how to develop and build datacenters in these places.

BNamericas: Is Argentina attractive?

Abreu Jr.: There’s a lot of demand for Argentina, something we didn't see before the [Javier] Milei administration.

Looking at the cloud market, companies have been quite neglected in Argentina for a long time. So, with the economy recovering, I imagine that enterprises will start investing again. And investing means changing their entire technological structure and going to the cloud. We have clients interested in cloud there.

BNamericas: Apart from the project in Mexico, do you have any others under development now for hyperscalers?

Abreu Jr.: Yes. I would say that we have projects under development in the five countries [Brazil, Mexico, Chile, Argentina and Peru], at different stages.

BNamericas: Do you already have land?

Abreu Jr.: Yes, land and energy. I can't say where exactly, obviously, I don't want our competitors to find out, but I can tell you that we’ve already developed land in the five countries.

BNamericas: What is NextStream's vision? Do you foresee being a gigawatt company?

Abreu Jr.: We aim to be a gigawatt company. With the capital capacity of Actis and General Atlantic, the team we have and the presence we’ve built in the various countries, we’re well-positioned to do so.