TMT
Data in the Andes
Equinix, a US company that specialises in internet and data centres has recently acquired four data centres in Peru and Chile for USD 705 million. The announcement is reflective of an increasingly lucrative trend where data centres function almost akin to a real estate business where spaces can be sublet. The operator rents the land and sets it up with equipment to provide storage and cloud services to other companies. Equinix, among other similar outfits, is migrating to having its own servers where its clouds are hosted. Then the data centre rents that space to companies.
A telecoms expert in Peru explained, “The main variables are electricity and the issue of response time in the event of a service outage. In Peru there is only one small data centre, owned by Entel, which is just 8% of its total operation, the rest is in Chile, which has the largest data centre infrastructure in South America. So Equinix has entered the market by buying a major share of the infrastructure.”
"...Equinix has entered the market by buying major infrastructure. This business is booming and the cloud is also booming.”
A telecoms expert, Peru
Equinix is entering the market with a strong statement. The reason for the sale to Equinix, from Entel, is that as a data centre operator it is not a direct competitor of Entel, since Entel's business is not that of data centres. In Chile, Entel was the largest data centre operator. In Peru, it is different because the largest data centre operators are not telecoms, but rather IBM.
What are the key challenges? “There are several challenges that exist beyond pure electricity generation or socio-political issues. Another risk in the Andean region is the threat of natural disasters, for example the earthquake in Chile in 2007. At that time, all the servers went down except for Entel's since they were not located in the capital Santiago which was badly affected,” explained the telecoms expert.
"There are several challenges that exist beyond pure electricity generation or socio-political issues [there is also] the threat of natural disasters..."
A telecoms expert, Peru
Digital infrastructure in the Andean cone lags well below regional peers but this could be changing. The level of maturity of the economies, especially in Peru, has seen a migration of medium-sized companies having their own data centres. Increasingly, the public sector is driving this data migration to the cloud. Equinix’s acquisition is unlikely to be its last.
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