Owners of hosting and colocation companies everywhere should get out a pen and write a thank you note to Cincinnati Bell (CBB) – enjoy a nice glass of bourbon as well… the good stuff, make it a 25 year old Vanwinkle… you are about to feel wealthier. Earlier today Cincinnati Bell announced the acquisition of CyrusOne, a Texas-based provider of colocation for $525 million. That is roughly 9x of last year’s sales. I know some people will comment that this valuation was based on the size of their datacenter inventory, but even looking at those metrics 163,000 sq ft of datacenter space divided by $525 million = $3220 per sq ft. Both of these are wonderful valuation metrics for our industry. To give you a frame of reference Equinix trades at 4.2X sales, Savvis at 1.1X and Rackspace at 3.2X.
Don’t get me wrong CyrusOne is a great company; they were one of the first colocation companies to recognize the power density required by virtualization and cloud computing, they developed their facilities specifically to cater to high-density deployments. So what does CBB get from this deal? Like most telecommunication companies they are somewhat of an enigma, they have fast growing VoIP and wireless businesses but much of their revenue comes from landlines and other legacy services (which coincidently are being cannibalized by their lower ARPU Wireless and VoIP products). Additionally data transmission, a business that should be growing fast, is in a brutal deflationary cycle. Bandwidth costs have gone from $300 per Mbps 10 years ago to less than $10 today. While CBB has some datacenters today, they are very much what you would imagine from a company with the word Bell in its name. With this acquisition CBB now has a platform to become a player in the national colocation market. This teamed with their access to capital and the deep management team makes them a formidable new player in our space.
About Stacy Griggs
Stacy Griggs is Sr. Director of Customer Experience for Cbeyond Cloud Services , previously Stacy was the Vice President of Sales for MaximumASP which was acquired by Cbeyond in 2011. Cbeyond (NASD-CBEY) is a publicly traded provider of telecommunication and cloud services, which has been recognized by Microsoft at its 2009 Worldwide Hosting Partner of the Year and 2010 Hyper-V Cloud Provider of the Year. Prior to Cbeyond Stacy held a series of positions at Hosting.com including Chief Sales Officer, Chief Service Officer and General Manager for their flagship Delaware data center.
Stacy has led several information technology services companies over the last 15 years. He was a Managing Director for KForce a $1 Billion publicly traded professional services firm. At KForce Stacy managed 5 business units that collectively generated $18 Million in revenue and had 140 employees. Prior to KForce Stacy was a Vice President and part-owner of Diamond Technologies, an 80 employee custom software development firm. Previously Stacy held management positions at TMP Worldwide, the University of Pennsylvania, and Humana.
Through his theWHIR blog, Stacy will touch upon sales and service in the Web hosting space, web hosting events, cloud computing and industry trends.
No related posts.
