European Data Centre Consolidation Will Cause Seismic Shifts

Consolidation in the colocation data centre market is set to cause “seismic shifts” in Europe this year with the battle for Telecity being just the beginning, new research has claimed.

Analysts from 451 Research group now firmly believe that larger multi-tenancy data centre players will grow out market share, leaving smaller providers having to focus on diversification to survive.

Telecity

Last week, US data centre operator Equinix made a £2.3 billion offer to buy up UK data centre rival Telecity in a move which would see Equinix expand its footprint in the increasingly competitive European data centre market.

However, in February, Telecity announced a planned merger with European data centre provider Interxion in a move which would make the resulting company larger in terms of market share than Equinix in the European data centre colocation market. But Equinix has now stepped into the ring and said that a deal between itself and Telecity would be “more compelling” than one between Telecity and Interxion.

This battle is now the start of the consolidation, argues 451. Alongside this pressure, analysts believe data regulation requirements, increasing demand for high-quality data centre space, latency concerns, and a need to differentiate – with footprint, connectivity or services – will drive acquisition activity in this space in the near future.

“This activity is likely to create new divisions between regional, international and pan-European wholesale and colocation providers, leading smaller players to focus more on services and areas of core competency to compete,” said 451.

Analysts estimate that there are 27 million square feet of operational data centre space in Europe. Of that, Equinix claims 5.33 percent, TelecityGroup 3.7 percent and Interxion 3.5 percent. If Equinix were to acquire TelecityGroup, the new company would have a 9 percent market share across Europe, while a combined Telecity/Interxion would have 7 percent market share by operational square foot.

Penny Jones, data centre expert at 451, said: “Our analysis suggests that MTDC providers in Europe will become more cautious bringing supply to market – in some cases, these providers may choose to expand in partner colocation facilities where cloud or other nodes exist.”

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