Data center major Equinix Inc. EQIX is in an expansion mode. The company recently revealed its plan to expand its Rio de Janeiro data center based on the platform provided by ALOG Data Centers of Brazil S.A. This data center, popularly known as RJ2, will enable Equinix to meet the growing demand for such services in the region.
Equinix had announced its plans to spend $24 million to open its RJ2 International Business Exchange (IBX) data center in Sep 2013. This new phase is scheduled to be opened in the third quarter of fiscal 2015.
The RJ2 data center will provide approximately 630 cabinets. This newly developed data center is the first Tier III-certified data center in the city.
This expansion will maximize redundancy and connectivity, thereby enabling mission-critical operation. The Tier III-certified data center will provide better security and mitigate risk, which in turn will enhance user satisfaction and help Equinix to expand its customer base and market share.
Equinix provides the fastest IP traffic route from the United States to Brazil from its Miami data center, MI3. The company is trying to capitalize on the business opportunity in this area, as Miami has the sixth highest Internet traffic globally and a large concentration of international companies.
Most recently, Equinix opened its third International Business Exchange (IBX) data center in Singapore, named SG3. The new data center brings the company’s total to 104 across 33 markets. The new data center is Equinix’s largest facility in the Asia-Pacific region and has been developed by Mapletree Industrial Trust. The nearly 385,000 square-feet facility can accommodate about 5,000 cabinets of which 1,000 will be available in the first phase.
Equinix's data center platform has been popular in the financial services, networking and content management industries. The company has taken advantage of the fact that many firms in these industries are setting up their bases in South America. Seeing the growth prospects in the region, particularly in Brazil, we believe that Equinix will be able to secure a solid revenue stream.
Equinix remains positive on the growing demand for data centers attributed to the Big Data exchanges. To meet this demand, the global interconnection and data center company is expanding its IBX data centers globally and gaining popularity among tech companies looking for data management. Thus, the company expects its total addressable market for retail data centers to increase at a CAGR of 8% from 2013 to 2017 and reach $24.0 billion. Based on this projection, the company expects 10% revenue growth rate through 2017.
Nonetheless, Equinix competes with Internet data centers operated by established communications carriers such as AT&T T, Level 3 Communications LVLT and Verizon Communications VZ.
Equinix has a Zacks Rank #3 (Hold).
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