Vocus Group Ltd shares rise on data centre deal with Equinix Inc.

Vocus Group Ltd (ASX:VOC) and Equinix have agreed a deal to utilise its Australia Singapore Cable.

Tom Richardson

Tom is a holder of the CFA Society of the UK administered Investment Management Certificate (IMC) and has more than a decade's professional experience in the investment management industry in Australia and the UK. Tom now works as a writer and editor for TMF Australia and has two easy to remember rules of investing he likes to follow. Avoid overpaying for growth stocks and avoid paying at all for stocks that are cheap for a reason. Tom prefers growth investing over value investing and says it's not rocket science, just avoid overpaying for the best returns.

Published September 7, 2017 4:27 pm AEST

The Vocus Group Ltd (ASX: VOC) share price climbed 2 per cent to $2.55 today despite the company releasing no specific news to the market. However, news reports are circulating that Vocus has signed a deal with giant U.S. data centre operator Equinix to connect Vocus's Australia Singapore Cable (ASC) to Equinix's Australian data centres and internet exchanges.

Equinix has a market value around US$36 billion and a relatively small footprint in Australia with Melbourne and Sydney data centres. The news reports suggest Vocus's cable will use over 150 networks in Sydney and 35 in Melbourne thanks to Equinix's reach. In effect all of Equinix's data centre customers will be able to use the cable's connectivity on a route between Australia and Asia that is subject to rising demand.

Vocus Group inherited the ASC project in full when it moved to acquire backhaul fibre provider Nextgen in October 2016, with the combined group potentially able to build a national and international network of profitable internet carrier services via Asia and the United States.

In order to fund the estimated more than $200 million total expense in constructing the ASC it has been rumoured that Vocus's 19 data centres might be up for sale, with multiple potential bidders including listed operator Nextdc Ltd (ASX: NXT).

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