Interoute's Silver Lining

9:00 AM Positive correlation between cloud demand and sales growth for European network operator

November 8, 2012

2 Min Read
Interoute's Silver Lining

9:00 AM -- For a long time, cloud services evangelists such as Joe Weinman have been stressing the importance of the network in the cloud ecosystem: A reliable, low-latency, secure underlying network is as important as the hosting facilities and applications/resources and the success of a cloud services strategy is reliant on all three.

The network part of the equation is starting to pay dividends for pan-European network operator Interoute Communications Ltd. , which this week announced its latest financials and further investment in its cloud services infrastructure (an expansion of its data center capacity).

Interoute was once in financial dire straits, as reported over the years. Now, though, it's on a roll and its growth and improving financial health are directly linked to demand for cloud-related services and network capabilities.

For the first nine months of 2012 the operator's revenues grew by 15 percent year-on-year to €296.7 million (US$378.3 million) and its earnings before interest, tax, depreciation and amortization (EBITDA) grew 23 percent to €52.8 million ($67.3 million). The company attributes its growth to "a surge in demand for its enterprise cloud-based Unified Computing offering, combined with sustained international demand for pan-European private network services."

We have talked previously about the impact that demand for cloud capabilities has had on Interoute's fortunes -- see Light at the End of the Pipe -- and that appears to be continuing, with the operator's extensive fiber network assets playing an important role in its ability to attract new custom.

The cloud, it seems, is giving a new lease of life to companies with extensive fixed network infrastructure, so keep an eye on the companies that suddenly seem hungry to snap up fiber assets. (See AboveNet Finds $2.2B Buyer in Zayo Group, Zayo Buys FiberGate and Zayo Continues Buying Binge With First Telecom.)

— Ray Le Maistre, International Managing Editor, Light Reading

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