Telecity pleases market with robust outlook

City A.M. Reporter
DATA centre operator Telecity yesterday posted a 22 per cent rise in full-year earnings, meeting analyst expectations, and gave a confident outlook for 2013 underlined by robust demand.

The British company bases its facilities in European cities like London, Amsterdam and Paris, where multiple Internet connections provide near failsafe services to retailers, banks, social media sites and video-on-demand providers.

Chief executive Michael Tobin said the group was continuing to build new capacity, which rose to 86 megawatts from 68 last year.

Demand was driven by growth in online activity, both at home and on mobile devices, he said.

“You probably watch TV over the Internet, do some online banking, do your Sainsbury’s shop, download a movie or make an Amazon purchase,” he said. “All of these things are driving growth.”

Telecity, which competes with Equinix and Interxion, triggered some concerns among investors last year about whether a slowdown in new capacity might be a sign of cooling demand.

Tobin said yesterday that there had been delays in opening new capacity in London and Amsterdam, but that these were caused by difficulties in obtaining planning permission and power supplies rather than demand weakness.

“Some analysts misinterpreted the slowdown of capacity growth as a slowdown of demand,” he said. “(But) not withstanding all of those of challenges, we ended the year with the largest expansion of capacity in our history.”

Analysts at Berenberg said guidance from management that it should be able to grow earnings in line with forecasts of about 20 per cent for 2013 would reassure the market.

Milan Radia at Jefferies, meanwhile, who has a “buy” rating on the stock, said it was a solid set of results.

Telecity’s adjusted core earnings rose 22 per cent to £129.5m in the year to end-December.