MIS share in net returns from data center contracts at 7%: CEO

Abdullah AlGhamdi, CEO of Al Moammar Information Systems

Al Moammar Information Systems Co. (MIS) will receive a 7% share in the net returns from the contracts recently signed for managing data center facilities of Microsoft Arabia Ltd and Saudi Data Center Fund 1, said CEO Abdullah Al-Ghamdi told Argaam.

The top executive added that each of the two data centers under the scope of these contracts will generate revenues representing more than 50% of the company's 2023 revenues.

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He also stated that the contract sealed last week to provide colocation and data center services represents the second partnership with Microsoft Arabia Ltd, after the signing of the first contract last June, indicating that the parties are Saudi Data Center Fund 1, MIS and Microsoft Arabia.

Saudi Data Center Fund 1 is valued at SAR 1.5 billion, with about SAR 1.3 billion being invested during the current period, said the CEO, adding that the first running capacity has been completed. He also noted that the latest contract allows transitioning to the expansion phase and ramping up the capacity.

The Saudi Data Center Fund 1 is focused on establishing six data centers in Saudi Arabia, three of which are in the Eastern Province and three others are located in Riyadh. The initial capacity of the fund is 24 megawatts. MIS and the fund are considered the largest owners and operators of neutral data centers.

The duration of the contract between MIS and the fund is 15 years, covering marketing and management of the aforementioned six data centers. He also noted that the two contracts penned with Microsoft are for the data centers located in the Eastern Province, while a third contract will be signed with one of the main entities providing cloud services in the coming period.

As for Riyadh, Al-Ghamdi indicated that there are two data centers, one of which will be ready for operation within the next two months, pointing to serious discussions with customers to lease these sites.

He also stated that nearly 70% of the Saudi Data Center Fund 1 is owned by sovereign entities and another 10% by MIS, while the remainder is owned by other investors, explaining that Saudi Fransi Capital is the fund manager. Previously, MIS had signed an exclusive agent contract for the design, construction and operation of the six data centers.

The company's designs match the required international designs, said the CEO, underlining that through the two signed contracts, Microsoft Arabia’s two data centers will contribute to providing cloud services from Saudi territories.

He expected that the operating profit of these centers to start showing from Q2 2026 as Microsoft Arabia’s cloud operations will launch in Saudi Arabia during this period, highlighting the possibility of the financial impact beginning to appear sooner.

According to data available to Argaam, MIS signed, on July 25, a joint contract with Microsoft Arabia Ltd and Saudi Data Center Fund 1 to provide colocation and data center services at an approximate value of over 50% of the former’s 2023 revenues.