Telecoms company enters data centre market with £4.85m acquisition

Dato

AIM listed Cantono plc, has sold its Hampshire data centre operation to SSE Telecom, the communications arm of Scottish & Southern Energy plc, for £4.85m.

Clearwater Corporate Finance advised Cantono on the deal. The sale, to one of the UK’s largest utility companies, will provide access to funds for further development of the data centre business and give SSE a foothold in the fast-growing market for co-location facilities.

The data centre facility, based near Southampton, went live in December last year and was operated by Cantono Data Centre Services (CDCS), a wholly owned subsidiary of Cantono Plc. It hosts networks, servers and IT storage gear on behalf of external organisations.

Co-location facilities are becoming increasingly popular with corporates because of the savings they can make compared to the cost of keeping their equipment on their own premises. Having their IT facilities located offsite and operated by professionals also gives companies added reassurance and allows them to focus on their core business.

However supply has not kept pace with demand and prices are increasing. Space in London is in particular short supply. Occupancy levels for current data centres are running at 85 per cent and with London’s electricity supplier having placed a moratorium on building new centres until the 2012 Olympics, the lack of space is set to remain a problem for the foreseeable future.

Cantono’s data centre provides 40,000 ft of space and has the capacity to double in size due to the newly constructed mezzanine floor. It should ultimately provide facilities for over 2,000 racks. CDCS has agreed commercial terms with suppliers to provide the site with independent 1Gb communications circuits to give it a direct connection to the City of London.

The state of the art data centre, which was designed and built in partnership with IBM, uses the latest cooling technology which makes it 15 per cent more energy efficient than comparable centres. This in turn should help to increase returns on investment following the introduction of carbon trading next year.

Clearwater was appointed by Cantono Plc, in March 2009 and ran an accelerated process in which completion was achieved within 3 months. The Clearwater team was led by partners Carl Houghton and Nick Jones, assistant director Ben Wilson and senior analyst Emma Leathley.

Carl Houghton said: “Given the current difficulties in raising funding on the Alternative Investment Market, Cantono Plc’s board believe that the data centre business’s interests would be better served under the ownership of a large corporate such as SSE, which can provide the capital required to pursue its medium to long-term development plans. It will also give SSE a foothold in the UK co-location market, allowing it to take advantage of this fast-growing IT sector.”