Monday, 3 August 2009

Telecity shows how ‘boring’ can be profitable

(By Anthony Miller – Monday 3rd August 2009 8:55am). Boring they may be, but data centre hosting services are certainly back in fashion. And when you get the utilisation right, it’s not a bad way to make money. Indeed, main-market listed Telecity has obviously ‘got it right’ this half, almost doubling operating margins to 20.1% on £82m of revenues (+26% at constant currency). The key, as I said, is utilisation, and Telecity increased revenue per occupied space by 10% (constant currency), partly due to higher pricing. This market seems to be one of the few where demand appears to be ahead of supply. More after this morning’s briefing.

Post briefing update

Now here’s words that would gladden the heart of any CFO: “We bill customers quarterly a month ahead of the quarter”. Here’s another: “We are building double density facilities; we charge customers by the kilowatt-hour, not by space ... and we do it at half the cost they can do it themselves”. Great business model, isn’t it. And another: “Cloud is brilliant; it’s not a threat, it’s an opportunity. Cloud attracts (consumers) to data centres – this is our core business”. I could go on. But on the other hand, you could say that ‘all’ Telecity does is provide square metres, kilowatts, MIPS and megabytes, and surely they’re all commodities. But, as they say in the classics, it’s how they put them all together that sets them apart. And how they do just that we hope to bring you after we meet management.

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