UAE telecoms operator e& and South Korea's Bespin team up to offer cloud services

The UAE’s biggest telecoms operator, e&, has signed a joint venture agreement with South Korea's Bespin Global to create a new company that will provide public cloud services for the Middle East, Turkey, Africa and Pakistan.

The entity, which will be branded as “Bespin Global MEA, an e& enterprise company”, will be 65 per cent owned by e& and 35 per cent by Bespin, e& said in a Friday filing to the Abu Dhabi Securities Exchange, where its shares are traded.

The companies will each contribute an initial $10 million in capital.

Abu Dhabi-based e&, formerly known as etisalat, has also committed to provide the joint venture, which is subject to regulatory approvals, with up to $40 million in shareholder loans to finance the growth of the business, it said.

As part of the agreement, e& enterprise, one of e&'s units, will make a primary investment of $60 million into Bespin and join its board of directors, in exchange for a stake of about 10 per cent.

The UAE company will also have the option to invest a further $60 million within 18 months upon the completion of the transaction, it said.

“The joint venture with Bespin Global and the investment in the holding company are part of our ongoing efforts to extend our cloud offerings and establish our commitment as a trusted partner to governments and enterprises in the UAE,” said Salvador Anglada, chief executive of e& enterprise.

The adoption of cloud technology is growing because of the rise in data consumption and evolving economic and societal landscapes that have become increasingly digital.

A number of global majors have flocked to the UAE and other GCC countries to set up their cloud data centres and serve a market in which demand for the technology has increased significantly, including Google, Microsoft, Amazon, Oracle and Alibaba.

Global end-user spending on public cloud services alone is expected to approach the $600 billion mark in 2023, with inflationary pressures dictating how much growth the industry will be able to carve out, a study by Gartner showed last month.

The joint venture is part of e&'s strategy of expanding its services and market reach. It is considering a number of moves, including acquiring telecoms companies abroad to broaden its revenue base, and is keen on buying businesses that complement and add value to its consumer business, group chief executive Hatem Dowidar told The National in October.

The partnership will make use of the capabilities of both companies, from e& enterprise's strong local market presence and portfolio of digital transformation solutions to Bespin's specialised skills in cloud and related services.

It will also allow e& to access the South Korean market, one of the most technologically advanced economies globally and home to a number of industry majors, including Samsung Electronics and LG.

“This step is in line with e&’s strategic ambition of scaling up the e& enterprise vertical and enhancing its digital capabilities,” e&'s filing said.

On the other hand, the partnership is also part of Bespin Global's strategy to expand globally and boost its growth plans and profitability, its chief executive and co-founder John Hanjoo Lee said.

“The joint venture will leverage capabilities that will help build the future of cloud business. In addition, we welcome e& as an investor in Bespin Global and appreciate their confidence in our strategy and operations,” he said.

Bespin serves more than 1,700 customers from its locations in South Korea, China, Japan, Singapore, Vietnam, Indonesia and the US.