Equinix, Inc. (EQIX) has added a second data center in Tokyo, acquiring a center from VSNL International. Equinix will purchase the VSNL leasehold improvements for $7.5 million and lease the building from the current landlord. VSNL will remain as a colocation tenant, along with its customers.
The data center, located in the Tokyo Metropolitan area, will add approximately 740 sellable cabinets and approximately 73,000 square feet, increasing Equinix's Tokyo footprint to approximately 116,000 square feet. Equinix intends to place new customers in the center during the fourth quarter of 2007.
"We have seen robust growth in customer deployments at our existing Tokyo center, mirroring the increasing demand for Internet and networked services in Japan," said Peter Van Camp, CEO of Equinix. "We were very fortunate to have the opportunity to acquire this high-quality center, as it will enable us to more than double our original capacity and maintain our momentum, in this important market."
Equinix will invest $25 to $30 million to upgrade the center to its standard (or "Equinize" as the company put it in a news release) with a power infrastructure will support blade technologies and other high power density deployments. The center will be interconnected to the existing Tokyo IBX through redundant dark fiber links managed by Equinix. At capacity, the facility is expected to generate annual revenues between $20.0 and $25.0 million.
VSNL International will continue to operate in the center as a long-term customer of Equinix, providing its standard suite of communications services to its customers in Tokyo, including colocation services. Existing VSNL International customers, several of whom are already operating in other Equinix IBX centers, will remain in the center as VSNL International customers.
With the acquisition of the new Tokyo data center, as well as the sale of its Honolulu IBX, Equinix has updated its guidance for 2007. Total revenues are expected to remain unchanged at $352.0 to $362.0 million. EBITDA is now expected to range between $132.5 and $138.5 million which reflects $4.5 million in incremental net costs directly attributable to these two transactions. Capital expenditures are now expected to range between $255.0 and $275.0 million, which reflects the incremental expansion capital expenditures attributed to the build-out of the new Tokyo expansion IBX. Ongoing capital expenditures for 2007 remains unchanged at $30.0 million.
"We are pleased to have entered into this transaction with Equinix which is in line with our global efforts to reduce overall operating costs and, in light of Equinix's plan to invest in expanding this facility, will ensure continued and enhanced services to VSNL and our customers in Tokyo, an important market for us," said Vinod Kumar, President, VSNL International.