Equinix (EQIX) to Set Foot in Bordeaux with New Data Center

Equinix (NASDAQ:EQIX), Inc. EQIX announced plans to open its first data center in Bordeaux, France, in third-quarter 2021. This will be the first carrier-neutral data center in the city.

The new facility, named BX1, will have direct fiber links to Equinix's International Business Exchange (IBX) sites in Paris. This will enable global businesses and local authorities in New Aquitaine to establish direct and safe connectivity to the world's digital economy. BX1 is expected to offer 32,000 square feet of colocation space.

BX1 will also be a new European gateway for data traffic between the United States and Europe by offering a landing hub for the new submarine cable, AMITIE. This will bolster the facility’s connectivity opportunities.

Notably, Bordeaux has emerged as a new global connectivity hub by attracting notable start-ups and cutting-edge industries such as aerospace and optics photonics. Given the growing demand for low latency, increased bandwidth and strong connectivity by businesses, Equinix’s expansion of its French footprint to the city is a strategic fit and will enable it to see significant leasing activity.

Per management, “the Bordeaux hub will serve as one of the key connectivity points to Paris with its rich wide-ranging digital ecosystems. BX1 aims to greatly increase international expansion opportunities for French companies, whilst providing a major connectivity hub from and to the French and global digital economy."

Markedly, Equinix plans to add more data centers in the coming quarters to capitalize on the growing demand for colocation and interconnection services.

Although such moves are strategic fits, it requires huge capital outlays. Given the company’s significant debt obligations, these capital-intensive activities are concerning.

Equinix currently carries a Zacks Rank #3 (Hold). In the past six months, the company’s shares have declined 19.8% against the real estate market’s rally of 10.9%.

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Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.

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