Zayo's 2nd IPO, Megaport FY22 Update, and More

Last updated on by Christian Koch

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Let’s get into this week’s update.

Your Weekly Briefing

Cloud Infrastructure

What's next for cloud infrastructure? AWS is going deep with Local Zones, but Microsoft and Google haven't responded. They originally planned to launch more regions in more places, instead of creating massive regions in fewer locations. Will one strategy prove more effective than the other? Cloudflare is working backwards, having recently added Storage and Databases, but will they eventually need to offer raw compute to fight against Akamai who recently acquired Linode, or is serverless good enough? Lots to think about.

News

  • Microsoft's new cloud region in Qatar is now generally available. Link
  • Lumen announced the addition of Edge Virtual Machines to its portfolio of edge computing infrastructure. According to Lumen's website, Edge VM's are currently available in only two markets in the US at this time, Austin, TX and Northern Virginia with 6 additional locations coming to the US and 5 to Europe later in 2022. Link
  • Maxihost, popular Brazil-based cloud infrastructure platform has rebranded and is now known as Latitude. Link

Connectivity

Speaking at the Cowen Communications Infrastructure Summit, Steve Smith, Chief Executive of Zayo provided some insight into how the turnaround of Zayo is going since he joined ~2yrs ago, here's a few takeaways: 1) Enterprise bookings are up 30% y/y, 2) Regarding M&A, Smith says the company will continue to look for tuck-ins and larger acquisitions and will probably do a few more capability acquisitions to strengthen product lines. Further highlighting gaps in the US market but also consolidation opportunity in Europe. On the capability side, software remains in focus with SDN/SD-WAN high on Zayo's agenda. I still believe the big opportunity for someone like Zayo would be to acquire Megaport or PacketFabric, and while valuations may be unreasonably high still, it's possible they begin to soften, and 3) Smith expects the company to be public again 5 years from now, indicating a 5-7yr turnaround from when DBRG/EQT acquired the company and put Smith in charge to steer what could be previously considered as a sinking ship.

News

  • Meta is partnering with local ISP, DigitalC by providing funding, installation, and delivery of FWA infrastructure to deliver high-speed internet to more than 1,000 households with high-speed internet. Link
  • DriveNets, a cloud-native networking infrastructure vendor raised $262M in its Series C investment round led by D2 Investments with participation from current investors including Bessemer Venture Partners and others. The company has around 100 customers with AT&T being its largest. Link
  • The US FCC wants to modernize the USF program. Link
  • The SeaMeWe-5 submarine cable system which extends from Singapore to Western Europe via the Middle East experienced an outage on a segment of the system that runs through the Suez Canal near Egypt. Link

Data Centers

After a slow but repetitive news cycle this past week, I’ve got three things for you heading into the week: 1) Are wholesale/hyper-scale data centers becoming boring, predictable investments like Logistics REITs, or is there more to them? 2) What’s taking so long for INAP to sell its data centers? Word on the street is the company is also selling its cloud business, which comes after selling its network business to Unitas Global a few months ago, and 3) What happened to Evoque’s data centers? The Brookfield-backed data center operator has quietly removed its international data center locations from its website, a move that comes a few months after announcing a JV with startup Archer Data Centers, to build hyper-scale data centers in Gallatin, Tennessee, where it’s neighbor is Facebook/Meta.

If you’re interested in learning about hyper-scale data centers and more specifically, the data center industry and digital infrastructure, you should check out the infra/STRUCTURE conference next month hosted by friends of Foundations, Structure Research, in Toronto.

News

  • Despite local policy and potential pressures on grid, Dublin City Council approves two new multi-story data centers for AWS to be build on current campus at Clonshaugh Business and Technology Park. Link
  • Echelon Data Centers, a developer of hyper-scale data centers to companies like AWS, has ended up on the other side of the table and is challenging the ban brought upon data center development. Link
  • VaporIO announced its Kinetic Grid platform is now available in 6 US markets including, Las Vegas, Phoenix, Chicago, Atlanta, Dallas and Pittsburgh, with additional markets coming soon. Link
  • Edge Centre’s, a small micro-data center startup from Australia is expanding into the US with a fresh $5.7M of funding in their bank account. Link
  • Warburg Pincus/Macquarie are reported to be working an investment of ~$450M in Chinese data center operator, Bohao. Link

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Further Reading

Sources of data center energy estimates: A comprehensive review: Joule

Irene Y. Zhang: The Fall of Datacenter Software

Streaming claims largest piece of TV viewing pie in July | Nielsen

The future of USF: Make tech companies pay? - RCR Wireless News

China opposes U.S. chip act, to take measures to safeguard rights | Reuters

From Ligado to Verizon to Dish, spectrum conflicts continue brewing | Light Reading

Prince William could steal Loudoun’s title of Data Center Alley. But land use battles are raging. - Virginia Mercury

AWS On Air ft. History of Silicon Innovation at AWS | AWS Events | YouTube

What Belt-Tightening? Cisco CEO Plans $1 Billion Budget Increase to Retain Employees — The Information

Towercos set to do battle for Oi’s Brazilian towers | total telecom

Latest Research Notes

Is MVE the Answer? - A Closer Look at Megaport's FY22 Results

Cloudflare, Fastly 2Q22 Highlights

Equinix 2Q22 Product & Interconnection Highlights

Notes from DigitalOcean's 2022 Investor Day

Thoughts on the Jim Chanos Data Center/REIT Short

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