Deutsche Telekom is to expand its data center footprint to support its T-Systems unit.

As reported by Telco Titans, Ferri Abolhassan, T-Systems’ chief executive, recently said the company was planning to add five new hubs to its existing estate of 16 data centers.

However, he said these will be based on a partnership with T.Capital, the telco investment arm, to avoid capital layout of constructing its own facilities.

“We are going to look for five more [data centers] and we are not going to put that into capex,” he said during the company’s 2024 investor day this month. “We are doing that [in a] quite smart [way] with our friends from T.Capital, who can bring us partners that invest in concrete” and then rent space to T-Systems.

The company is expanding its data center footprint through an initiative known as “Project Xcalibur.”

Thorsten Langheim, head of USA & corporate development at Deutsche Telekom, said the scheme will see the operator partner with the “best of the best” in the data center sector, “in order to learn what is happening and in order to facilitate business for them."

He also indicated that Deutsche Telekom will only make minority investments through the plan.

According to one of the presentations from the investor day, T-Systems has 130MW of data center capacity across 16 data centers.

Founded in 2000, T-Systems' footprint spans facilities and private cloud regions in Germany (Munich, Frankfurt, Biere), Switzerland, Austria, the Netherlands, and the US. It launched a private cloud region in Spain earlier this year.

Deutsche Telekom CEO Timotheus Höttges last year suggested the telco was interested in building up its data center portfolio in Germany and Europe, saying the business was “exploding” yet noted a “shortage” due to demand for AI applications.”

Digital Transformation Capital Partners (DTCP), which was spun out of Deutsche Telekom in 2015 but retains close ties to the telco, owns a majority stake in German data center operator Maincubes. It also recently took a stake in Irish data center firm Atlantic Hub.

DTCP is advising T.Capital on the firm’s AI data center strategy.

The move is an about-face for the telco, which was planning to potentially sell T-Systems back in 2022.