Equinix Moves into Mexico with $175m Axtel acquisition

Equinix moves into Mexico with $175m Axtel acquisition

09 October 2019 | Jason McGee-Abe

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Equinix has expanded into Mexico after entering into an agreement with Axtel to acquire three of its data centres in a $175m all-cash deal.

The facilities, which serve the Mexico City and Monterrey metro areas, will help the global interconnection and data centre company expand Platform Equinix to new strategic markets as businesses continue to move IT infrastructure to the digital edge.

In terms of targeting and extending the platform geographically, a number of markets were highlighted to Capacity by Charles Meyers, Equinix’s CEO, in our June/July magazine (see the magazine to the right). Meyers told Capacity: “I’ve talked about a number of markets where we see gaps in the platform that we would like to fill over time...We are not in Mexico yet and that’s a market that we’re interested in over the next few years." Other market opportunities identified to Capacity at the time included India, Africa and an expanded presence in Canada.

The addition of these three facilities in two strategic technology metros in Mexico is part of Equinix's strategy of extending its global leadership into attractive large-growth markets. This acquisition, when combined with the previous acquisitions of key traffic hubs in Dallas (Infomart) and Miami (NAP of the Americas), will further strengthen Equinix's global platform by increasing interconnection between North, Central and South America.

"Digital transformation is forcing more businesses to evolve their IT infrastructure from centralised to distributed architectures. Customers are seeking new locations to keep their data in proximity to points of consumption and as a part of this evolution, our enterprise and service provider customers have a strong desire to interconnect at the digital edge in Mexico,” said Jon Lin, president of the Americas at Equinix (pictured), who was appointed in June 2019. Lin adds more context on the deal in an Equinix blog post you can find here.

“The three Axtel data centres that serve the Mexico City and Monterrey metros provide an optimal market entry for Equinix to bolster operations in the region and facilitate even greater interconnection within the Americas region and between the Americas, Asia, Australia and Europe."

The three data centres will add approximately 115,000 sq ft of colocation space to the Equinix International Business Exchange (IBX) data centre portfolio. Given the power capacity of these three sites, this transaction will make Equinix one of the largest network-neutral data centre operators in Mexico. Including current expansion projects, Equinix has invested more than $500 million in its Latin American operations including Brazil, Colombia and now Mexico.

Earlier this year, Equinix announced it would extend the digital edge by spending nearly $2 billion to open 12 new International Business Exchange (IBX) data centres and expand 23 existing IBX data centres in 2019.

Equinix believes there is uncaptured market demand in the region for interconnection and data centre services if bandwidth requirements and end-user demand continue to increase as expected. The two data centres that serve the Mexico City metro are strategically located in Querétaro. Both are carrier-neutral facilities with multiple diverse fibre entry points that include five network service providers currently operating within each data centre. The Monterrey area facility, which is a carrier-neutral facility with 10 network service providers, is a highly connected data centre offering a key connectivity gateway between the US and Mexico.

Equinix plans to offer Equinix Cloud Exchange Fabric (ECX Fabric) in all three data centres. ECX Fabric is an on-demand, software-defined networking (SDN)-enabled interconnection service that allows any business to connect between its own distributed infrastructure and any other company's distributed infrastructure, including the world's largest network service and cloud providers, on Platform Equinix.

The three facilities generated approximately $21 million of revenues in the 12 months ending December 31, 2018, with an EBITDA margin profile accretive to the Equinix business. Approximately 40 Axtel employees and contractors, primarily in the operations functions of the acquired facilities, will become Equinix employees or contractors.

The acquisition is expected to close in Q1 2020, subject to customary closing and regulatory approval.