Affordable connectivity has allowed banks to interconnect branches, set up terrestrial links and Virtual Private Networks, which were more expensive when the country was relying solely on satellite connectivity.

Harder economic times have forced companies to cut back on capital expenditure while the falling cost of connectivity has enabled businesses to invest in operational expenditure mainly through managed services provided by telcos.

"Smaller players wishing not to invest huge amounts of money on hardware (servers, storage, networking) and software (generic applications like ERP, CRM) can now lease capacity and access software under a pay as you go model," added Hook. "It makes sense to pay as you go rather than pay huge sums to acquire and maintain hardware and software, telcos and major vendors are positioning themselves to provide cloud services."

While bigger corporations will be attracted to cloud services and hosting locally, the cost of hosting for smaller companies and individuals is still considered higher compared to Europe and the U.S.

The core challenge, Hook said, is in the critical mass needed by hosting service providers to recoup their investment costs in order to be competitive like the U.S. and Europe, which means that the data centers may not attract many customers beyond the corporate sector.