Equinix to enter West African data center market in $320M deal

Equinix President and CEO Charles Meyers was bullish about expanding the company's data center reach into Africa during the 2021 and Q4 financial call with analysts this week.

In December 2021, Equinix announced plans to expand in Africa with an agreement to acquire MainOne, a West African data center and connectivity solutions provider that operates in Nigeria, Ghana and Côte d'Ivoire, also known as the Ivory Coast. The transaction has an enterprise value of $320 million and is expected to close in early Q2 of this year.

"This acquisition will mark the first step in Equinix's long-term strategy to become one of Africa's leading digital infrastructure providers and will position us well in the Continent's largest economy," said Meyers on the call.

Figure 1: Equinix has 240 data centers across 66 metros in 27 countries.
(Source: Andrey Volodin / Alamy Stock Photo.)

The acquisition will contribute over 64,000 gross square feet of space to Platform Equinix, including 570,000 square feet of land for future expansions. MainOne owns and operates a subsea network from Nigeria to Portugal, plus 1,200 kilometers of a terrestrial fiber network in southern Nigeria, which deliver connectivity to and from Europe, and across West African countries.

2021 revenue exceeds $6B

For 2021, Equinix hit $6.6 billion in revenue, up 8% from the year earlier. The data center company said this is its 76th consecutive quarter of revenue growth, which it claims is the longest consecutive quarterly revenue growth for any S&P 500 company; Equinix made Fortune 500 status in Q2 of 2021. For Q4, Equinix reached a revenue of $1.7 billion, up 10% YoY.

The company had an operating income of $1.1 billion in 2021, a 5% increase from 2020, with an operating margin of 17%. Equinix said this is a result of "strong operating performance," lower acquisition cost and increased investments to scale business expansion. Q4 operating expenses hit $546.2 million, an increase from $507.4 million in Q3.

Channel bookings made up 40% of Equinix's total bookings and nearly 60% of new customers. In addition, interconnection revenues were up 12% YoY in Q4.

It was a busy end-of-year for Equinix – also in December, the company joined a consortium of seven organizations to develop low-carbon fuel cells to power data centers to further its efforts to reach climate-neutral status by 2030.

Global data center expansion

Last October, Equinix agreed to a $575 million joint venture with PGIM Real Estate to expand its xScale data center program in Sydney, Australia; the xScale program provides data centers to hyperscalers.

In addition, Equinix announced last month an agreement on a $525 million joint venture with GIC to launch two xScale data centers in Seoul, Korea. Investment in Equinix's 36 global xScale data centers will total $8 billion when complete. Equinix also announced plans to expand its xScale facilities in 17 projects in the Bordeaux, Calgary, Dubai, Frankfurt, Kamloops, Los Angeles, Osaka, Paris, Salalah, Singapore, Sofia, São Paulo, Toronto and Washington, D.C. metro areas.

CFO Keith Taylor noted on the call with analysts that APAC and the Americas are Equinix's fastest growing regions, growing 11% and 10% in revenue in Q4, respectively. EMEA grew 9% YoY.

"The Americas momentum is broad-based with 24/27 metros increasing gross bookings year-over-year, led by out Boston Denver, Mexico City, Los Angeles and in Toronto market," said Taylor. "The former Bell Canada assets continue to perform better than expected, in part due to increasing carrier and cloud deployments in a key Canadian markets.

Despite growth in APAC, CEO Meyers said inflated power pricing rates in Singapore has presented some financial challenges for the company: "We believe the current dislocation in Singapore is transitory with higher prices showing signs of moderating in the second half of the year. Bottom line, the business is performing very well."

Equinix has 240 data centers across 66 metros in 27 countries, and more than 10,000 customers including Zoom, Nasdaq, Zscaler, Oracle, Cloudflare and Ubisoft. One-third of customers are utilizing Equinix Fabric service, which connects digital infrastructure and services via an on-demand, secure software-defined interconnection, said the company.

"We continue to expand on our global footprint with 41 major projects underway across 28 metros in 19 countries, representing over 20,000 cabinets of retail, and over 80 megawatts of xScale capacity," Meyers said on the call. Equinix also increased data center interconnections to 419,000, up from 414,000 in Q3.

Equinix expects to reach between $7.2 and $7.3 billion in revenue for 2022, which would be a 9% increase over 2021.

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— Kelsey Kusterer Ziser, Senior Editor, Light Reading