Bezeq International and Edgar Investments Plan $130 Million Server Farm in Petah Tikva
Translated & summarized from Ice by baba
Bezeq International and Edgar Investments plan to jointly build and operate an underground server farm in Petah Tikva, with an estimated investment of 400-500 million shekels. The facility, expected to be operational by 2028, aims to meet the growing global demand for data processing driven by AI and cloud services. The project faces challenges related to electricity grid connections but has secured an initial power approval.
The story in 5 lines · by baba
- Bezeq International and Edgar Investments will jointly build a server farm in Petah Tikva.
- The project is estimated to cost 400-500 million shekels and launch by 2028.
- Demand for server farms is increasing globally due to AI and cloud computing.
- Edgar Investments expects its share to yield 50-80 million shekels in annual revenue.
- The project has an advantage with an existing 16-megawatt electricity connection approval.
Real estate firm Edgar Investments and Bezeq International have signed a non-binding memorandum of understanding to jointly establish and operate an underground server farm in Petah Tikva. The project, slated for completion by 2028, will span approximately 13,000 square meters and is projected to cost between 400 and 500 million shekels (approximately $107-$133 million), with each company contributing equally. This venture aligns with the global surge in demand for server farms, driven significantly by advancements in artificial intelligence and cloud computing.
Server farms house powerful computers essential for cloud services, applications, banking systems, and AI models like ChatGPT. The International Energy Agency (IEA) reports a 17% increase in global server farm electricity consumption by 2025, with AI-focused farms seeing a 50% rise. Building these facilities is considerably more expensive than standard office structures, requiring substantial investment in continuous power supply, backup systems, cooling, security, and advanced communication links.
Under the agreement, Edgar will provide the land and oversee construction, while Bezeq International will manage equipment procurement, technological setup, and operations. The facility will accommodate connections from various communication providers, not solely Bezeq. Edgar estimates its share of the project could generate annual revenues of 50-80 million shekels and EBITDA of 25-40 million shekels, depending on facility occupancy.
A significant challenge for such projects in Israel is securing sufficient electricity grid connections. The Israel Electricity Authority has noted requests for server farm connections totaling nearly three times the country's average electricity consumption, leading to a temporary freeze on some new applications. This project, however, benefits from an existing initial connection approval for 16 megawatts. The deal remains in its preliminary stages, with a 90-day negotiation period, extendable, contingent on building permits and other approvals. If finalized, it will allow Edgar to diversify beyond real estate leasing into ongoing revenue from computing infrastructure.