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Digital Realty’s strong Q2 paves way for Telx takeover

Colo reports strong results in line with forecasts.

By Joao Lima

Digital Realty is the latest data centre provider to report its Q2 results, months ahead of its takeover of Telx.

The company posted revenues of $420 million for the last quarter, 3% up from Q1 ($406 million) and 5% more over the same quarter last year ($401 million).

Net income for Q2 was $117 million, $0.86 per share, up from $41.5 million, $0.31 per share, in Q2 2014.

Earnings Before Interest, Taxes, Depreciation, and Amortisation (EBITDA) were $243 million for the second quarter of 2015, a 2% increase from the previous quarter and a 4% increase over the same quarter last year.

In July, the colo announced a $1.886 billion bid to acquire Telx’s data centre business, which the company expects to be finalised by the end of 2015.

Digital Realty said it will fund the acquisition with proceeds from the recent forward equity offering and "a mix, subject to market conditions and other factors, of preferred equity and debt".

Digital Realty is in direct competition with other colo providers, including Equinix. David Barker, Technical Director of 4D-DC, told CBR: "Equinix is very much at the large scale end of the collocation market, although they will deal in smaller requirements they have a number of very large collocation footprints in their facilities.

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"With the takeover of Telecity this will give them a much wider footprint to manage and we may also see some upwards price pressure as one of their largest competitors is taken out of the market.

"[Other colos, including Digital Realty] Instead, will need to focus on more tailored solutions, building in multiple services and additional levels of support that may not be available when trying to manage a European wide footprint of data centres."

A. William Stein, CEO at Digital Realty, said: "In mid-July we announced an agreement to acquire Telx, a leading provider of collocation and interconnection data centre solutions, and we look forward to leveraging our combined strengths to offer the most comprehensive set of data centre solutions on an open, connected, and global platform."

CBR contacted Digital Realty, which refused to further comment on their results.

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