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Country's maiden green-data centre will be established near the port city of Chattogram to encourage foreign investment and provide cheaper services.
The Asian Development Bank (ADB) and the Bangladeshi government have partnered to set up the data centre, according to BMI, a unit of Fitch Ratings.
The project, to be developed under a public-private partnership (PPP) model, will use renewable energy for the data services pivoted by two new subsea cables.
Bangladesh currently "lacks an established market for data centre and compute infrastructure", the ratings agency says.
It further says most existing facilities are concentrated in Dhaka but are considered outdated, with designs that do not support modernisation or expansion of data halls.
Chattogram, however, is emerging as a viable investment location due to its availability of larger land areas and greater power resources.
The city's location outside the capital, Dhaka, also makes it attractive for the development of more advanced data-centre facilities.
According to BMI, demand for low-density compute infrastructure in Bangladesh is expected to rise as the country's mobile-connectivity network continues to expand and modernise.
"The country's highly favourable demographic profile will drive increasing demand for data centres, provided disposable incomes rise and access to wireline-connectivity improves," BMI states in its report, a copy of which is obtained by the FE.
However, it cautions that political uncertainty in Bangladesh remains a key risk, potentially deterring short-term investor interest.
Bangladesh's mobile-network operators (MNOs) have seen significant revenue growth from mobile-data services.
Between Q3 2022 and Q2 2024, Robi Axiata's data revenues as a percentage of total sales increased from 35 per cent to 43 per cent while Banglalink's data revenues accounted for roughly 30 per cent of its sales in Q2 2024.
Despite a sharp decline in Q3 2024 due to political instability, data-consumption patterns in the country have remained resilient and continue to grow.
The potential returns for data-centre investors in Bangladesh also depend on the adoption of fixed broadband connectivity.
The latest figures from Bangladesh Telecommunication Regulatory Commission (BTRC) show that fixed broadband connections reached 13.7 million in Q3 2024, marking a 9.87-percent year-on-year increase.
However, the cost of broadband adoption remains high for both households and businesses due to the country's weak backbone-fibre infrastructure, both on land and subsea.
To address this challenge, Bangladesh is set to receive two new subsea cables-the SeaMeWe-6 and the Bangladesh Private Cable System-expected to be operational by 2026. These additions will significantly enhance the country's international bandwidth capacity, currently supported by the SeaMeWe-4 cable.
With greater access to international-connectivity highways, investor interest in Bangladesh's data-centre market is expected to grow, particularly among foreign cloud service providers (CSPs).
Several Asian data-centre firms, including India-based Yotta, are already investing in the country, partnering with local firms, to build new facilities.