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November 22, 2018

Cash Crunch Causes Data Centre to Call in Administrators

"Customers have opted for cloud-based alternatives to physical data storage"

By CBR Staff Writer

Aegis Data Group, which operates a 30,000 square foot data centre in Godalming, Surrey, has called in administrators citing “pressure on profitability and cash flow”.

The operators of the Tier 3 co-location data centre, which has 6.2MVA of secured power, have appointed Simon Thomas and Nicholas O’Reilly, partners of Moorfields Advisory to handle the sale of the site, which is four miles southwest of Guildford.

Moorfields said it is working with staff to ensure continuity of service for customers and that their data remains secure, while a longer-term sale strategy is explored.

See also: Exclusive: CyrusOne to Build Three New London Data Centres

Simon Thomas of Moorfields said: “Unfortunately, in recent years customers have opted for cloud-based alternatives to physical data storage which has impacted on Aegis’ ability to attract customers. This put pressure on profitability and cash flow, leading to the group’s administration.”

He added: “Notwithstanding this, the data centre is state of the art and fully functional, so represents an excellent acquisition opportunity for existing data centre operators and businesses with large data storage requirements.”

Cloud providers also occupy data centres managed by third parties, but typically require high degrees of scalability.

Price Competition is Strong

GlobalData’s Principle Analyst, Global IT Managed and Hosted Services, John Marcus told Computer Business Review: “When you have the global giant Equinix building its twelfth £100 million London data centre, and UK leaders like Colt building six new data halls at its London North data centre, there is real competitive pressure on independent service providers that lack the scale and the interconnections etc. offered by the bigger players.”

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He added: “We do see periodic divestments: e.g. telcos selling off data centre businesses typically consisting of older, smaller sites, and difficulty with profitability due to price competition even without a decline in occupancy.”

“Power supply is by far the main operating cost, but costs are not necessarily stable and they are certainly not consistent from market to market. A profitable pricing level in one data centre may generate a loss in another data center with the same rate of occupancy, and the cost of power can vary from year to year, impacting profitability on customer contracts that tend to be two-to-three years in length.”

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