Telus is equipping a data centre it already owns in Rimouski, Que., with as many as 500 graphics processing units (GPUs) from Nvidia Corp., which makes the in-demand chips tailored for training and running AI models.Graham Hughes/The Canadian Press
Telus Corp. T-T will start operating AI data centres and sell access to Canadian companies that want to build and run artificial intelligence models, a market that is dominated by U.S. tech giants such as Microsoft Corp. MSFT-Q, Google Inc. GOOGL-Q and Amazon.com Inc. AMZN-Q.
Telus is starting modestly by the standards of the AI world. The company is equipping a data centre it already owns in Rimouski, Que., with as many as 500 graphics processing units (GPUs) from Nvidia Corp. NVDA-Q, which makes the in-demand chips tailored for training and running AI models. Microsoft and Google, meanwhile, are purchasing hundreds of thousands of GPUs. CoreWeave Inc., an AI cloud provider preparing an initial public offering, has around 250,000.
Operating this kind of infrastructure is complicated and expensive. Companies typically pay cloud service providers to access GPUs for AI rather than buying their own. Many Canadian companies already rely on U.S. tech firms for these services.
Telus chief information officer Hesham Fahmy said the company has ambitions to acquire tens of thousands of GPUs over several years, but expansion will be driven by customer demand. “We’re ready to go as fast as Canada needs,” he said. “We have the facilities available and we have the plans.”
The federal government is trying to entice companies to build more AI infrastructure in Canada and last year allotted $2-billion to encourage construction and access to chips. The fall economic statement offered another $15-billion in loans and equity investments to encourage pension funds to invest. Telus has had discussions with Innovation, Science and Economic Development about its AI infrastructure program, but Mr. Fahmy said the company is moving ahead no matter the outcome.
“In order to do AI, you have to have access to the compute. And compute is becoming a scarce resource,” he said.
Data centres can house different kinds of equipment for a range of digital services, such as storage and cloud computing, but AI is a huge growth area.
The Rimouski facility, which is powered by hydroelectricity and uses natural cooling to reduce water consumption, is slated to open this summer and has room to expand. Once that data centre is at full capacity, Telus plans to equip another facility in Kamloops, B.C., to handle AI.
The company is emphasizing that its AI data centre will be fully sovereign, meaning it is Canadian-owned, operated and domiciled, reducing the risk that information could be obtained by foreign governments and law-enforcement agencies. Sovereignty is especially important for companies and public institutions that deal with sensitive personal information, such as in health care and banking.
Telus is a part of Nvidia’s cloud computing partner program as well, allowing it to tap into the chipmaker’s expertise. About 15 telecoms are part of the program worldwide, all of them seeking a new revenue stream through AI computing.
But Telus is the only Canadian telecom in the program. Rivals BCE Inc. BCE-T and Rogers Communications Inc. RCI-B-T have instead grown cool to data centres.
Telecoms rushed to invest in data centres more than a decade ago to expand into cloud computing services and support their own broadband networks and higher data use from customers.
Starting in 2012, BCE spent $855-million to buy 11 data centres from Q9 Networks and eventually owned several dozen facilities. The following year, Rogers launched a data centre business and snapped up several cloud computing companies.
Telus, too, got into the market and says it now has five data centres, along with several smaller facilities.
But data centres proved to be a tough business. With ample capacity available, telecoms aggressively priced their services and struggled to turn a profit. Recently, BCE and Rogers have followed the lead of their U.S. counterparts, who have sold their data centres to raise money for network expansion and to pay down debt.
BCE sold 25 of its facilities in 2020 for just over $1-billion. And last April, Rogers said on an earnings call that it was trying to off-load its enterprise data centres as part of its efforts to raise $1-billion from the sale of non-core assets and pay down debt.
Now, the growth of AI has led to massive investment in data centres. In 2023, companies spent US$215-billion on these facilities, according to a report from Bank of America Securities.
“We’ll see more growth based upon AI applications getting deployed and industry seeing productivity enhancements,” said Ronnie Vasishta, senior vice-president of telecom at Nvidia. “We’re at the front end of this demand cycle.”