Inside the Data Center Industry, Tech with the Heart of Infrastructure

Behind every m-banking transaction notification that arrives within seconds, every video that loads without buffering, and every chat message sent instantly, there is one type of building working non-stop, 24 hours a day, 7 days a week: the data center.

But before diving into the investment opportunities and risks, it is worth taking a step back first. What exactly is a data center? Why has this industry come into the spotlight? And just as importantly, where does a data center actually sit within the broader map of the TMT sector we already know?

What Is a Data Center?

Data Center Building Illustration. Image Source: Magnific/DC Studio

Simply put, a data center is a physical facility—usually a building or a dedicated complex of buildings—designed to store, process, and distribute data at scale.

Inside, thousands of servers and storage systems are lined up, supported by infrastructure such as precision cooling systems, layered backup power supplies, and high-speed connectivity networks. All these elements work together to safeguard the single most critical factor in this business: uptime, or uninterrupted service availability.

In terms of business model and ownership, data centers can be mapped into several categories:

• Enterprise/On-Premise: Facilities built and operated by a single organization (a bank, a large corporation) solely for internal needs. The gradual migration away from this model toward colocation or cloud is one of the demand drivers for commercial data center providers.

  
  

• Colocation: The most common model, in which the operator leases space, racks, and electrical power to clients who bring their own servers. Some also offer Managed Services / Managed Hosting to manage clients’ IT infrastructure.

  
  

• Interconnection Data Center (Carrier Hotel): A colocation variant that serves as a meeting point for various network operators and cloud providers to connect directly with one another. In Indonesia, this concept has been running since the Indonesia Internet Exchange (IIX) was established by APJII (Indonesian Association of Internet Service Providers) in 1997, followed by OpenIXP in 2005.

  
  

• Hyperscale: Very large-scale facilities (tens to hundreds of megawatts) built to serve the needs of giant cloud computing providers or AI workloads.

  
  

• Edge: Smaller-scale facilities placed closer to end users to reduce latency.

  
  

• Modular/Containerized: Prefabricated, container-based units that can be assembled and installed quickly, suitable for rapidly adding capacity or reaching remote locations.

Regardless of the business model, multi-year lease contracts give the data center industry recurring income—relatively stable and predictable revenue. This characteristic is one of the main attractions in the eyes of investors.

The quality of a data center is also generally measured through Tier I–IV certification from independent bodies such as the Uptime Institute, which assesses the reliability of the design, redundancy, and operations of a facility. As an illustration, PT DCI Indonesia Tbk. (DCII) is recognized as the first operator in Southeast Asia to obtain Uptime Institute Tier IV certification, the highest standard with the lowest potential for downtime.

Data Center Cooler Set Illustration. Image Source: Magnific/evening_tao

The Data Center Industry in the IDX Sector Classification

Data centers fall under the Technology Sector, specifically within the Information Technology Services & Consulting industry classification.

Data center companies such as DCII operate in the same primary sector as digital platform companies like GOTO or EMTK. However, their business characteristics are, in fact, very different.

Aspect	Digital Platform	Data Center
Revenue Model	Transaction commissions, advertising, and subscriptions. Tend to fluctuate with the number of active users.	Leasing of space, racks, and power under long-term contracts. Generates stable recurring income.
Business Stage	Generally still in an aggressive expansion phase; user growth is prioritized over short-term profit.	Relatively mature once a facility is fully operational and its space or power has been leased.
Nature of Capital Intensity	Capital intensive for subsidizing and acquiring users (marketing, promotions, cash burn).	Capital intensive for physical construction, land, and electrical power capacity (megawatts).
Key Metrics	Gross Merchandise Value (GMV), Take Rate, Cash Runway.	Installed capacity (MW), occupancy rate, length of lease contracts.

This difference in character makes the relevant ratios and valuation methods for the two so different—something investors need to keep in mind so as not to lump the entire “Technology Sector” together under a single analytical lens.

Analyzing Data Center Stocks: Ratios, Valuation, and Sentiment Investors Need to Watch

Data centers are a business whose accounting can look very different from its actual operational reality. Ratios commonly used to value stocks in general can be misleading if applied without adjustment.

For example, when using the Price-to-Earnings (P/E) Ratio, the figures for data center stocks will appear very high—not solely because the market is overly optimistic, but also because the numerator (net profit) is structurally suppressed by the accounting treatment of massive physical asset depreciation.

Below are several ratios and methods that are more relevant for analyzing data center stocks:

Ratio / Method	Purpose	Key Insight
EV/EBITDA	Values a company relative to core operating earnings, before interest, tax, depreciation, and amortization. More resistant to non-cash distortions.	IDX’s data center issuers have historically traded well above the average of global peers, which are typically in the single-digit to low-teens range.
EV/MW (per Megawatt)	Values a company based on installed power capacity, a more representative approach for a business whose value rests on physical infrastructure.	Also reflects the significant premium the domestic market is willing to pay compared to the per-MW valuation of similar global players.
Contracts & Client Churn	Assesses revenue visibility through the length of lease contracts and how often clients switch providers.	Multi-year contracts with low churn reflect higher-quality, more stable and predictable recurring income.
Debt to Equity Ratio (DER)	Assesses how much of the expansion is financed by debt versus equity.	Important to watch given the capital-intensive nature of the business; a well-managed DER provides room for expansion without excessively burdening the balance sheet.
Discounted Cash Flow (DCF)	Estimates fair value based on projected future cash flows discounted to present value.	Relevant because long-term contracts provide more predictable cash flow visibility compared with businesses in general.

To illustrate just how wide this valuation range can be: several domestic securities research reports have recorded the EV/EBITDA ratio of IDX’s data center issuers moving from the tens on 2024 figures to the hundreds on 2025 figures—far exceeding global peers, which typically trade in the single-digit to low-teens range.

A similar pattern is visible in EV/MW, where the per-megawatt valuation of domestic issuers has at times been recorded at many multiples of global comparables. This gap reflects the premium the market is willing to pay for scale, track record, and the scarcity of pure-play assets on the IDX Composite. It is also a reminder that the margin of safety at such elevated valuations becomes far thinner.

The Current State of the Data Center Industry

The expansion of Indonesia’s data center industry is actually proceeding very aggressively. However, this expansion is actually being driven by entities that are not—or have not yet—listed on the IDX, are financed by foreign capital, or rely on private funding schemes. For capital market investors, this underscores the importance of distinguishing between optimism about the data center industry in general and the actual availability of investment instruments accessible on the exchange.

What deserves even closer attention: the number of investment options already listed on the IDX is also shrinking. Since February 10, 2026, shares of PT Indointernet Tbk. (EDGE) have been officially suspended following the company’s request to go private and delist, citing integration into the Digital Edge group ecosystem as well as low public share liquidity. Digital Edge is offering a tender offer of IDR 11,500 per share—141.2% above the average price—with the delisting process expected to be completed around August 2026. This means that, of the two pure-play data center issuers previously listed on the IDX, only DCII will remain.

Macro Sentiment Driving Data Center Stocks

Because of their capital-intensive nature and reliance on physical infrastructure, data center stocks are also sensitive to a number of macroeconomic variables:

• Benchmark Interest Rate (BI-Rate): A higher benchmark rate means the cost of financing expansion, whether through debt or the discount rate used in DCF methods, becomes more expensive—something that matters given the capital-intensive nature of the data center business.

  
  

• Rupiah Exchange Rate: Most data center equipment—from servers and cooling systems to backup generators—still relies on imports. A weaker Rupiah can push up capital expenditure costs in domestic-currency terms.

  
  

• Industrial Electricity Tariffs: Electricity tariff categories for large power users (I-3 and I-4) are adjusted every three months based on a number of macro parameters, including the exchange rate, crude oil prices, and reference coal prices. Since electricity is one of the largest operating cost components for data centers, this periodic tariff adjustment mechanism means the operating costs of issuers in this sector are also exposed to the same macro volatility.

  
  

• Global AI Capex Cycle: More and more data center players in Indonesia are targeting regional demand, including overflow AI computing needs from neighboring countries. This means that capex sentiment among global technology giants also influences domestic demand expectations, even though structurally Indonesia’s key catalysts remain different from those in the United States.

A disciplined approach—paying attention to the right ratios, understanding the true landscape of players, and monitoring relevant macro sentiment—will be helpful to see the long-term direction of the data center industry.

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Disclaimer: This content is created for educational purposes or service promotion, and does not constitute a recommendation to buy or sell any specific Securities. Any risks arising from investment decisions made based on the information in this publication are the sole responsibility of the respective audience. PT KAF Sekuritas Indonesia is licensed and supervised by the Financial Services Authority (Otoritas Jasa Keuangan / OJK).