The consolidation story in the European colocation world just entered a new, fascinating chapter this morning. Three weeks after making a play to derail the Telecity/Interxion merger and acquire Telecity Group for itself, Equinix has won major battle. Telecity this morning has agreed to their offer of £2.35B ($3.6B).
Telecity’s three dozen data centers across 9 European markets fit quite well with Equinix’s own footprint, taking it into some new markets while offering greater depth in some of the biggest ones. Telecity did about €470M and €221M in annual revenues and EBITDA in 2014, which will boost Equinix’s business by some 20% or so. The consensus seems to be that Equinix is getting a good deal here, a circumstance that has perhaps been helped along by the recent strength of the dollar over the euro.
The deal terminates the proposed all-share combination between Telecity and Dutch-based Interxion, which had been announced back in February. Interxion was the smaller partner in that deal, and likely doesn’t have the firepower to compete with its larger US-based rival in a bidding war for Telecity. However, we will just have to see if the story is really over.
There aren’t that many pan-European, carrier-neutral colocation footprints of this scale, and having the US-based Equinix in possession of that much of it could cause a few of the continent’s regulatory heads to turn. It’s a competitive industry and there’s plenty of levers to keep Equinix in check, but where data is stored and processed has been of increasing political interest in Europe in recent years.
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Categories: Datacenter · Mergers and Acquisitions
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I’m never happy to see Equinix expand, much less at the expanse of a decently sized rival.
Why not?
They’re the epitome of arrogant 800 lb gorillas. TelX has gotten that way too. I haven’t had much of a need to deal with CoreSite yet. They’ll end up going the way of AADS, MAE East\West, etc. They’ll be replaced by a new breed that Open-IX is fostering. Over-priced and difficult to work with.
I’d have to agree on difficult to work with. For all their crowing over spending money on innovation on software and ease of delivery, its still like pulling teeth to get much done.
The overprice thing I never get though: their centers are where all the major action is as far as who you need to get to or get data from: that’s typically called the law of supply and demand. You can find much cheaper by going to a random peak 10 facility in Kentucky or something, if price is all that matters to you.
Telx too: very difficult but they have inserted themselves into many of the most critical MMR’s and wield that position like a bull in a china shop.
I would take EQIX over them any day of the week.
A smart company knows when to stop being… how they are. They’ve crossed the threshold and now are driving new competition. Open-IX was because of Equinix and other industry champions not playing nicely.
TelX was free cross connects, now they’re $350/month. For small operators, that’s as much as the service going over it. I can’t help but think that Netrality wouldn’t exist if there wasn’t a drive for lower priced interconnection.
Akamai has pulled out of Equinix. I can’t help but imagine that NetFlix and others are on the way as well. Some of that’s greener pastures for the business model, but some of that is simply the incumbent mentality.
That said, them being the way they are is causing a shift in the market place. Diversification is good for the Internet as a whole. More carrier hotels, more IXes, etc. are a good thing.
Also, the marketplace is shifting as far as who matters in interconnection. Most traffic is between eyeball ISPs and NetFlix, Google, FB, Akamai, Apple, Amazon, etc. About a dozen companies make up 85% of interconnection traffic (from an eyeball’s perspective). The rest are just “nice to haves”.