Data centre company EdgeConnex is confident about the future of the Argentinean economy. The opening of its first Latin American facility on the outskirts of Buenos Aires mirrors the renewed confidence that Mauricio Macri’s new government has instilled in foreign investors.

“We thought about investment in the country for many months. We watched the elections and felt that the risks did not necessarily abate, but we did feel comfortable that Argentina was a place where we could prosper and we decided that the country was moving in a direction that justified our investment,” says chief commercial officer Clint Heiden of the 2015 election that saw Mr Macri installed in the Casa Rosada, ending Cristina Fernández de Kirchner’s presidency.  

Back in favour

Investors had largely shunned Argentina since the disruptive financial and political crisis of 2001. The country lost access to international financial markets, and the byzantine capital and currency controls engineered by Ms Fernández in her eight years leading the country made crossborder trade and investment difficult, if not impracticable. Mr Macri’s government has rolled back many of Ms Fernández's economic policies, and reopened the economy to foreign capital, paving the way for companies such as EdgeConnex to make a move in a market of massive potential.

“Even though Argentina is the second largest economy in South America, it hasn’t yet experienced the level of competitive penetration and adoption in our industry that Brazil has,” says Mr Heiden. “And our customer base expressed a desire to create a carrier-neutral environment that would allow them to operate in the region in a more local capacity.”

EdgeConnex has built 31 edge data centres in second-tier internet hubs in North America and Europe since 2013, aimed at cutting latency times in the delivery of cloud services and internet content (such as high-definition videos) by bringing users nearer to the internet hubs that process these services and content.

EdgeConnex also took into account Argentina’s improving macroeconomic cycle, with the International Monetary Fund putting GDP growth of a stable 2.5% in 2018, and inflation moderating (although still in double digits). EdgeConnex committed up to $50m for the first phase of a new network-neutral data centre in Pilar, a city on the outskirts of Buenos Aires. This should improve the local delivery of content and cloud services, which remain largely dependent on data centres located thousands of kilometres north on the east coast of the US. A possible second phase could bring total investment to about $100m, adds Mr Heiden.

Local support

The project has been endorsed by a wide spectrum of local stakeholders, from the local government in Pilar to the Argentina Investment and Trade Promotion Agency and the private sector. 

“It was critical to have a pro-business emphasis behind us,” says Mr Heiden. “We found that the ecosystem has realised the cost savings and positive effects of the services they would be able to add to their portfolio by embracing our offer.”

Telecommunications service provider Silica Networks, as well as its local peers in the market – Claro Argentina, Internexa, IPlan, Metrotel, Telecom Argentina – featured among those that publicly endorsed the project. “As a result of the impending Buenos Aires edge data centre, many local market customers will gain the ability to access and utilise a wider range of cutting-edge cloud services,” said Silica Networks CEO Horacio Martinez when the project was announced.

EdgeConnex’s new edge data centre is scheduled to go live at the end of 2018. In the meantime, the company is already screening locations in Chile with a view to doubling its regional presence, and bringing content and services closer also to clients across the Andes.