Equinix’s US$7b xScale data centre bet is working

Equinix’s US$7b xScale data centre bet is working

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With an extra US$3.9 billion put inside its investment wallet this month, data centre giant Equinix now plans to build 32 of its hyperscale-focused xScale data centres across the globe that will provide a total of over 600 MW of power capacity.

The colocation and interconnection company expects revenue to reach upward of US$6.64 billion in 2021, which would be a 10 percent increase year over year. This year, the fast-growing company ranked on the Fortune 500 list for the first time in its history at No. 461.

Equinix xScale data centres are tailor-made to serve hyperscale companies including the world’s largest cloud service providers—Amazon Web Services, Google and Microsoft. The three companies are spending billions annually on data centre space, capacity, colocation services and IT infrastructure. The xScale data centres currently being constructed around the world are specifically built to support the rising demands of cloud services that need to scale rapidly.

Equinix CEO Charles Meyers said Alibaba Cloud, AWS, Google Cloud, IBM Cloud, Microsoft Azure and Oracle Cloud Infrastructure are leveraging Equinix’s more than 220 data centres to connect to their customers and partners to drive cloud services. The company’s xScale initiative is Equinix’s answer to winning as much hyperscaler revenue share as possible in the coming years from its slew of data centre competitors, which includes Digital Realty.

“With our xScale program, these hyperscalers can continue to grow at Equinix while in close proximity to an ecosystem of 10,000 customers,” Meyers said.

Equinix’s 32 xScale data centre locations 

Over the next several years, Equinix said its xScale data centre footprint will span three regions: Europe, Asia-Pacific and the Americas.

Breaking down the locations where Equinix plans to build its xScale data centres in Europe, the company will build five in Frankfurt; four in Paris; three in Dublin; two in London; two in Madrid; as well as one xScale data centre each in Helsinki, Milan and Warsaw.

In Asia-Pacific, Equinix will have three xScale data centres in Tokyo as well as three in Osaka. In the Americas, Equinix is opening three xScale data centres in Sao Paulo and one in Mexico City. Three additional xScale data centres will be unveiled in the future.

Equinix launched its first xScale data centre in Tokyo in March, followed by the opening of its second xScale centre in Paris in February.

Equinix’s capital strategy 

In June, Singapore’s Government of Singapore Investment Corp. (GIC) Sovereign Wealth Fund, a state-owned investment fund, injected US$3.9 billion into Equinix’s xScale data centre initiative. GIC will own an 80 percent interest in the future joint ventures and Equinix will own the remaining 20 percent equity interest, according to Equinix.

The US$3.9 billion adds to the more than US$3 billion Equinix has captured from investors and joint ventures over the past two years in a move to rapidly expand the company’s bullish xScale data centre vision and footprint globally.

Equinix’s edge services are tied directly to xScale’s access points, enabling higher-speed connections closer to users and giving hyperscalers the ability to consolidate both their core and access point deployments into a single provider.

“The joint venture arrangement of xScale enables these large deployments to be structured in an off-balance sheet model that aims to preserve capital for investment in our traditional retail data centre and digital infrastructure business and maintain our strategic and financial flexibility,” said Equinix’s Meyers.

During Equinix’s Analyst Day 2021 this month, Meyers was bullish about the company’s growth and future. “In the three years since our last Analyst Day, we have added over US$1.6 billion in revenue, 20 new data centres, 100,000 new interconnections and entered the Fortune 500,” he said.

This month, Equinix also said it was committed to becoming climate-neutral and set a science-based target for emission reduction across global operations and supply chain by 2030.

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