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The growing demand for datacentre capacity in developing markets is likely to fuel the next wave of merger and acquisition (M&A) activity in the colocation sector, according to 451 Research.
The market watcher’s latest Datacentre KnowledgeBase report into the global colocation and wholesale market shows the sector generated $28.9bn in annualised revenue during the third quarter of 2016, with North America and Asia-Pacific (Apac) emerging as the source of 42% and 31% of this sum, respectively.
In the years to come, the analysts at 451 Research said a growing proportion of the revenue generated by the colocation sector is likely to come from “edge” markets and developing countries.
Furthermore, 451 Research’s forecast suggests the global colocation and wholesale market will be worth around $48bn by 2021.
“The datacentre market continues to grow, not only in many of the main markets, but increasingly in ‘edge’ markets outside of the global top 20,” the analyst house said in a statement.
Leika Kawasaki, senior analyst of datacentre initiatives at 451 Research, said this trend is likely to fuel demand from the large, global colocation providers for facilities in these edge regions, paving the way for a fresh wave of merger and acquisition activity in the market.
“Interest in edge markets is one of the factors driving consolidation,” said Kawasaki. “Over the next one to two years, we expect to see growing interest from top providers and investors in markets outside of the top 20, particularly in Asia and Latin America.”
451 Research’s Datacentre KnowledgeBase report monitors the performance of 1,193 colocation companies, operating 4,500 datacentres, around the world.
Read more about the colocation market
- Synergy Research’s latest datacentre-focused market tracker highlights how the global colocation sector is becoming a three-horse race.
- CBRE’s third-quarter datacentre market tracker highlights soaring demand for colocation capacity in Frankfurt and London, as cloud providers court European enterprises.
The report echoes the recent findings of Synergy Research Group by pegging colocation provider Equinix as the market leader with 9.5% share, followed by Digital Realty who has a hold on 5.7% of the market.
The gap between the top two providers is set to widen, said 451 Research, once Equinix’s acquisition of Verizon’s datacentre business closes later this year, which will secure the company a 11.4% share of the market.