USD230mn Data Centre Investment Reinforces Bullish UK View

BMI View : Our bullish assessment of the UK as a leading European market for data centres and related services is reinforced with the news that Telehouse International has committed GBP135mn (USD230mn) to the construction of a new carrier-neutral facility in London's Docklands. We expect both the UK digital economy and the wider European carrier market to benefit from this investment.

Owned by Japan-based KDDI, Telehouse operates four data centre facilities in London, three at its Docklands campus in the East end. These were among some of the first carrier-neutral facilities to be built in Europe and, with a current combined co-location space of 20,865 square metres, are an important element in Europe's data traffic landscape. Telehouse claims that as much of 70% of Europe's live Internet traffic passes through its London facilities. Rising traffic volumes, driven by growing use of cloud-based services such as video streaming, necessitates additional infrastructure investment.

The planned new facility, dubbed Telehouse North Two, will be built next to Europe's oldest data centre, constructed in 1990. It will add 23,134sqm of co-location space to Telehouse's footprint, taking the total to 73,395sqm. It will have more than double the capacity of the Telehouse North facility, which currently serves 101 carriers.

BMI View : Our bullish assessment of the UK as a leading European market for data centres and related services is reinforced with the news that Telehouse International has committed GBP135mn (USD230mn) to the construction of a new carrier-neutral facility in London's Docklands. We expect both the UK digital economy and the wider European carrier market to benefit from this investment.

Owned by Japan-based KDDI, Telehouse operates four data centre facilities in London, three at its Docklands campus in the East end. These were among some of the first carrier-neutral facilities to be built in Europe and, with a current combined co-location space of 20,865 square metres, are an important element in Europe's data traffic landscape. Telehouse claims that as much of 70% of Europe's live Internet traffic passes through its London facilities. Rising traffic volumes, driven by growing use of cloud-based services such as video streaming, necessitates additional infrastructure investment.

Telehouse London Data Centre Facility Snapshot
  Telehouse West Telehouse North Telehouse East Telehouse Metro
Date Opened 2010 1990 1999 1997
Co-location Size (sqm) 4,705 9,717 5,400 1,043
Power per Rack 2kW-10kW 1-3kW 1-2kW 1kW
No. of Carriers 32 101 99 24
Source: Telehouse International

The planned new facility, dubbed Telehouse North Two, will be built next to Europe's oldest data centre, constructed in 1990. It will add 23,134sqm of co-location space to Telehouse's footprint, taking the total to 73,395sqm. It will have more than double the capacity of the Telehouse North facility, which currently serves 101 carriers.

BMI expects takeup of space on the new facility - a completion date for which has yet to be disclosed - to be strong, given forecasts for robust growth of Internet-based data traffic over the next five years. Cisco Systems projects Western European traffic to increase at a compound annual growth rate (CAGR) of 18% between 2013 and 2018, from 8,396 petabytes (PB) per month to 19,257PB per month.

Much of this growth is being driven by consumer-based services. Websites are being supplanted by applications (apps), smartphones and tablets. PCs are being used less and cloud-based storage has become mainstream. Telehouse claims that 78% of all UK businesses use at least one cloud service. BMI forecasts UK cloud computing spending to rise from GBP1.351bn in 2013 to GBP3.478bn by 2018.

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