Published on 14 Dec 2022 on Zacks via Yahoo Finance
Equinix (EQIX) to Invest US$160M in South Africa Data Center
Equinix, Inc. EQIX unveiled plans to invest $160 million (U.S. dollars) in a new data center in Johannesburg, South Africa, as part of its efforts to expand in the African continent.The company’s expansion into South Africa marks its entry into one of the largest and most digitally-developed nations on the African continent. Earlier this April, Equinix entered the African market with its acquisition of Main One for an enterprise value of $320 million.South Africa is a strategically important connectivity hub for digital networks and boasts a significant network of submarine communications cables. These strategic links between countries and continents are established at several points across the country's 2,850 kilometers of coastline. Hence, Equinix’s latest move seems prudent.Per Eugene Bergen, president, EMEA, Equinix, “This investment will give both South African businesses the opportunity to expand internationally and global businesses to expand into South Africa. Both will be able to accelerate their growth by rapidly scaling their infrastructure, easily adopting hybrid multicloud architectures and interconnecting with business partners through the Platform Equinix ecosystem of more than 10,000 customers.”The new data center, known as JN1, is 4 megawatts and will provide more than 690 cabinets and more than 20,000 gross square feet of colocation space. It is expected to open in mid-2024Moreover, the two additional phases of development are planned. The fully-completed 20.0 MW premium retail campus will provide more than 3,450 cabinets and more than 100,000 gross square feet of colocation space.Keeping in mind the environmental, social, and governance (ESG) aspect, Equinix is seeking sustainable and reliable energy sources for this new data center. The new facility is expected to feature several unique, sustainable attributes, including hyper-efficient cooling with outside air economization using minimal water, providing scope to limit the company’s carbon footprint and maintain energy-efficient operations with industry-leading PUEs.Equinix remains well-poised to bank on the robust demand in the data center space globally with its Platform Equinix, which presently spans six continents, 32 countries and more than 70 markets and has more than 245 International Business Exchange (IBX) and xScale data centers.The growing reliance on technology and acceleration in digital transformation strategies by enterprises led to a rise in demand for data centers, benefitting data center REITs like Equinix.Additionally, growth in artificial intelligence, as well as autonomous vehicle and virtual/augmented reality markets, is expected to be robust over the next five-six years, providing excellent growth opportunities for this data center REIT.Equinix is focused on tapping such growth opportunities with its acquisition and development efforts and has been very active on this front.Earlier this December, embarking upon its second venture into the Association of Southeast Asian Nations (“ASEAN”), Equinix announced plans to build a new IBX data center in Malaysia’s Nusajaya Tech Park in Iskandar, Johor.In October 2022, the company announced plans for a $74 million IBX data center in Jakarta. This expansion into the Indonesian market will help Equinix capitalize on the country’s growing digital needs.Following the announcement of its plans to expand into Indonesia and Malaysia, Equinix has announced two more expansion endeavors into ASEAN. In May 2022, the company acquired four data centers in Chile from a leading telecommunications provider, Empresa Nacional De Telecomunicaciones S.A. (Entel). In August 2022, Equinix closed the acquisition of a data center in Peru from Entel for a purchase consideration of $80.3 million. At present, Equinix has 46 major builds in progress across 31 markets in 21 countries.With a solid balance-sheet position and ample financial flexibility, Equinix remains well-positioned to capitalize on long-term growth opportunities.EQIX currently carries a Zacks Rank #3 (Hold). Its shares have gained 24.2% in the quarter-to-date period compared with the real estate market’s growth of 7.1%.
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