Telecity slumps as 2014 forecast fails to inspire

 
Oliver Smith
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BRITISH data centre operator Telecity has forecast weaker than expected revenue growth this year, sending its shares down more than 10 per cent to a two-year low.

The company, which targets the top end of the market from prime city-centre locations, said yesterday that demand from sectors such as e-retail and video streaming services remained robust, and it expected 2014 revenue of £355m to £362m, up from £325.6m in 2013.

“We will continue to grow the company, with a strong focus on value creation through profitable growth, disciplined capital allocation and returns to shareholders,” said chief executive Michael Tobin.

Telecity reported a 15.1 per cent increase in 2013 revenue to £325.6m, missing expectations, and increased its dividend by 40 per cent to 7p a share.

“Telecity’s results confirms our view that in spite of a strong demand environment ... the industry dynamics are deteriorating due to excess supply,” said analysts at Espirito Santo.

“We believe Telecity is seeing pressure from multiple angles – new entrants; wholesale providers and [the] trend of large customers self-managing their colocation details.

Investors are hoping for more detail on returns to shareholders which could come when the group appoints a new chief financial officer.

Tobin said a shortlist had been drawn up but it could be a few more weeks before an appointment.

Telecity was the biggest faller on the London Stock Exchange yesterday with shares closing down 9.6 per cent, to 660p a share.

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