Telco colocation players share strong growth

As colocation growth continues to soar three telco players feature in the top 20.

Revenue growth for the world’s three leading colocation operators far outstripped overall market growth last year according to Synergy Research. While total colocation revenues grew 9% from the first quarter of 2015, Equinix, Digital Realty, and NTT in aggregate grew by over 30%. Within the top 20 other companies whose growth rates were well above average, included China Telecom, DuPont Fabros, and KDDI-Telehouse. 

All three major players were successfully growing their revenues organically, but recent results have been further boosted by Equinix’s acquisition of Telecity and Bit-isle, Digital Realty’s acquisition of Telx and NTT’s acquisition of e-shelter. 

Beyond these three companies, the other top ten operators grew their colocation revenues by 7% while the companies ranked 11-20 grew by 12%. 

The data, which covers both retail and wholesale colocation, shows that the market is expanding steadily across all regions, though APAC has the highest growth rate. The major countries with the highest growth rates in Q1 were China, Japan, and Germany. Historically wholesale colocation revenues have been growing more rapidly than retail colocation, though in Q1 this year the growth rates were similar.

Notably, Digital Realty and NTT now have significant market shares in both the retail and wholesale sectors.

“Acquisitions by the big three and a few other players are helping to concentrate colocation market power in the hands of operators that can afford to build and support huge data center footprints spanning multiple regions,” said John Dinsdale, a chief analyst and research director at Synergy Research Group. 

The telecommunications vertical is one of the major sectors that generates huge amounts of data. Combined with the explosion in demand for managed hosting, machine-to-machine storage solutions and the need for telcos to get nearer to the edge of the network using micro data centres, telcos look set to continue having complex colocation needs. 

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