IT infrastructure provider Savvis Inc. (SVVS), which continues to expand its data center network, will add a new data center in London and expand facilities in Singapore and the New York market. The company said the additional space is needed to meet growing demand for hosting and network services. Savvis just opened new data centers in four major U.S. markets (New Jersey, Virginia, Santa Clara and Atlanta) and is prepping additional data centers in Boston and Chicago.
The London and Singapore facilities will offer Savvis Proximity Hosting to key financial exchanges colocated within the data centers. Initially, the expanded Singapore facility will offer direct connectivity and low latency network access to the Singapore Exchange. Proximity hosting provides exceptionally fast connections for financial firms conducting automated trading.
"SAVVIS has had great success with our managed hosting offering in the United Kingdom and the New York area, and has seen significant indications of growing demand for those services in the Asia/Pacific region," said Phil Koen, Chief Executive Officer of SAVVIS. "We are delighted to be able to build on our existing presence and strong sales and operations teams already in place in these three excellent markets for SAVVIS' services."
The new London data center will include 35,000 square feet of raised floor space and come online in late 2008. The Singapore data center expansion will add 18,000 square feet of raised floor space, including 2,000 square feet in which SAVVIS currently offers managed hosting services. The expansion space will be brought online in two installments in 2008.
The New York area expansion will add approximately 26,000 additional square feet in an existing facility, yielding approximately 17,000 square feet of sellable space that will be available in late 2008. Together, the three facilities increase SAVVIS' total data center footprint by approximately 79,000 square feet, yielding approximately 55,000 square feet of sellable space.
By 2010, the new London data center and expanded Singapore and New York-area data centers are expected to generate more than $80 million of revenue. Savvis said it expects that costs of the new and expanded data centers in 2007 will reduce Adjusted EBITDA for the fourth quarter by approximately $1 million, and costs incurred in 2008 will reduce Adjusted EBITDA for the year by approximately $10 million. As a result, the company is revising its outlook for fourth quarter 2007 Adjusted EBITDA to $38-40 million from $39-41 million previously announced, and revising 2008 Adjusted EBITDA to $200-210 million from $210-220 million previously announced.
Savvis will spend approximately $5 million in 2007 to acquire the lease and assets in the Singapore data center. In 2008, the company expects to spend approximately $100-110 million of cash capital expenditures to develop the three centers to meet SAVVIS' standards. Funding will be provided by proceeds from the sale of two data center leases to Microsoft in June and available cash.
The additional data center space in Chicago, Boston, London and Singapore will expand Savvis' total data center footprint to 1.45 million square feet of raised floor in 31 data centers worldwide.