T-Systems Raises €100M-Plus to Expand German Data Center

T-Systems, the data center services subsidiary of Deutsche Telekom, has secured a loan from a consortium of three German banks to finance construction of the second phase of what it claims is already the largest data center in Germany.

The data center in Biere, launched in 2014, currently has capacity to support about 30,000 servers and is nearly full, according to an announcement issued by KfW IPEX-Bank, one of the three banks. The expansion, slated for completion in 2018, will add capacity to support 45,000 servers more.

The bank didn’t disclose the loan’s exact amount, saying only that it was in “triple-digit million euros.” The other two members of the consortium are BayernLB and Landesbank Baden-Württemberg. The same consortium also financed the first phase of the facility.

KfW IPEX-Bank said demand for data center services that keep data in facilities within the country’s borders has been on the rise among German companies. It has accelerated since Edward Snowden’s leaks of classified information about the US National Security Agency’s digital surveillance practices, the bank said.

Some of the documents leaked by Snowden, however, also suggest that German intelligence official have reportedly cooperated with US intelligence by collecting and sharing metadata from German networks.

Germany is known generally to have stricter regulations around data privacy and physical location of stored data than other countries. Since Snowden’s leaks in 2013, several major US-based cloud service providers launched data centers in Germany, including Amazon Web Services, VMware, and DigitalOcean.

Last year, Microsoft announced it had chosen T-Systems to host its cloud services in Germany. In an unusual arrangement, Microsoft named T-Systems its “data trustee,” giving the German company control over the data of Microsoft customers it stores.

The move was a response to the US government’s attempts to strong-arm Microsoft into handing over personal data of one of its cloud customer – the customer is the subject of a criminal investigation in the US – stored in a Dublin, Ireland, data center. Microsoft claims the government’s jurisdiction doesn’t extend to data stored overseas and continues to fight the government in US courts.

By making T-Systems its data trustee in Germany, Microsoft allegedly puts customer data stored in Germany further out of the US government’s reach, since the German company is not subject to US law.

T-Systems hosts Microsoft’s cloud infrastructure in data centers in Magdeburg and Frankfurt. The Biere data center that’s being expanded provides backup for the Magdeburg site, according to T-Systems.