Chinese data center operator GDS Holdings is accelerating its infrastructure expansion that will see it more than doubling its capacity in China by 2018, according to a new report by Citi Research analyst Cher Chen.

The Shanghai-based firm operates its core regions in the Chinese cities of Beijing, Shanghai and Shenzhen, and is expected to invest an additional 1.7bn yuan ($244.7M) to ramp up new developments. This is on top of an initial 472.3m yuan ($68M) on data centers currently under construction.

Feeding content consumption

GDS
GDS’ Shanghai Waigaoqiao data center – GDS

GDS has invested a total 2.4 billion yuan on its existing data centers as of end-September, and has about 400 corporate clients, according to a report from SCMP. In total, it is expected to expand its capacity with a 37 percent compound annual growth rate in the next two years, which will bring it from 63,000 sqm currently to 119,000 sqm in 2018.

Chen attributes the growing demand for cloud computing services to the rapidly increasing consumption of online content in China.

There is growing demand for cloud computing services in China due to the increasing consumption of online content in China. On that front, GDS is very much in the cloud with more than 50 percent of its capacity booked for cloud usage; its client base includes juggernauts such as Baidu, Alibaba and Tencent.

“As a premium data center operator in China, GDS has a strong cloud client base comprising Baidu, Alibaba and Tencent,” said Chen to SCMP. “GDS has a high exposure to cloud, with more than 50 per cent of its area [capacity] booked for cloud usage.”

To be clear, carrier-owned data centers are expected to dominate the China market given the historical advantage of proprietary network infrastructure owned by the likes of state-owned telecommunication firms such as China Mobile, China Unicom and China Telecom.

GDS just raised $200 million in an initial public offering (IPO) last month, and reportedly made $127 million in sales last year ending June 30, 2016. Singapore Technologies Telemedia had also acquired a 40 percent stake in the company back in 2014 as part of a partnership that saw GDS expand its portfolio.