Bezeq and Adgar Plan a Data Center in Petah Tikva With up to NIS 500 Million in Investment

Bezeq and Adgar have signed a nonbinding memorandum to establish a data center in Petah Tikva, with each side expecting to invest NIS 200 million to NIS 250 million. Commercial operation is targeted for 2028, subject to a final agreement and approvals.

The proposed facility would provide at least 16 megawatts of capacity on Adgar's property in Petah Tikva. Bezeq's November 5 stock exchange announcement sets out an equal division of investment, expenses and revenue, with both partners keeping ownership of the assets they contribute.

A Site in Kiryat Arye

The Real Estate Center identified the planned location as Adgar Hub at 33 Efal Street, in the city's Kiryat Arye industrial area. It reported that the facility would be underground, covering roughly 14,000 square meters.

Bezeq's filing says a binding approval has been obtained from the Israel Electric Corporation for an initial grid connection of about 16 megawatts, dedicated to the project. Adgar had told Bezeq that construction permits were expected in the coming weeks.

The proposal adds physical infrastructure to the discussion about expanding computing capacity for artificial intelligence. Bezeq chief executive Nir David connected the initiative to growing demand for reliable computing infrastructure, in comments reported by the Real Estate Center.

The Partners Divide the Work

Adgar would provide the building, access roads and infrastructure up to the building's entrance, and carry out construction and engineering adaptations. Bezeq would buy the equipment and systems and lead their installation through readiness for commercial operation.

Operation and management services would be supplied by Bezeq or a provider acting on its behalf, at market prices. The proposed arrangement is a joint venture without a separately incorporated company.

Each party expects to finance its own share from its own resources, without borrowing at the project level. Combining the two estimates produces a total planned investment of NIS 400 million to NIS 500 million.

Access for Multiple Communications Providers

The filing describes the center as carrier neutral. That means it is intended to support different telecommunications providers, giving customers a choice of connectivity rather than tying the facility to a single network.

For businesses, hosting decisions involve both infrastructure and the security of corporate data. The companies are positioning the development around demand for cloud services and advanced computing, according to the Real Estate Center.

The proposed venture would run for 24 years and 11 months from the date the building is made available. Adgar would hold an extension option, with its terms to be agreed by the partners.

A Final Contract Still Comes First

The memorandum establishes a 90 day exclusivity period, extendable by another 60 days while negotiations continue. Completion depends on a detailed agreement, corporate approvals, a valid planning scheme and building permit, and compliance with applicable law.

Bezeq expects investment to be spread across 2027 and 2028. As occupancy increases, it forecasts annual revenue for the Bezeq group of NIS 50 million to NIS 80 million and EBITDA of NIS 25 million to NIS 40 million. EBITDA measures earnings before interest, tax, depreciation and amortization.

Those are company projections. Bezeq said actual development costs, operating costs, demand and the final commercial terms could change the outcome.