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Telecity’s H1 results put Equinix at ease

£2.3bn acquisition remains strong as Telecity reports results in accordance to its full year guidance outlined in February.

By Joao Lima

Equinix will be relieved today, as the company they are on track to buy, Telecity, reported no major losses for H1 2015.

On an Organic Currency Neutral (OCN) basis, Telecity’s revenue increased 6.6% to £173.5m (H1 2014: £174.1m), reflecting a moderate increase in revenue growth rates since H1 this year. Underlying revenue growth was 9.3%.

The company explained that the OCN does not include the contribution from acquisitions made in the current period.

Telecity posted an operating profit of £21.1m, down from H1 2014’s £54.8m.

The colo was also faced with £30.7 million in exceptional costs related to M&As, including a £15 million break fee from its original deal with Interxion.

Capital expenditure fell 2.1%, from £48.8 million in H1 2014 to £43.9 million between January and June this year.

Steve Webb, Ark Data Centres CIO, told CBR: "Industry consolidation is inevitable. The industry has been relatively immature for a number of years.

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"[As] That growth from the last five years starts to build up, the space is getting some pretty large chunky blocks. Given the challenges that we all have in either creating a new market or going into a new geography, we will see more of it [M&As].

Equinix succeeded in its bid to buy Telecity on May 29, in a share offer worth £2,351.9 million.

The merger is still to be approved by the European Commission, and is expected to be finalised in the first half of 2016.

John Hughes, Executive Chairman at Telecity, said: "We are working to progress the recommended transaction with Equinix which we expect to complete in the first half of 2016. We continue to believe this is a compelling offer and an excellent outcome for customers, employees and shareholders."

Equinix is due to report its Q2 and H1 2015 results later today.

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