Equinix Acquired 4 Data Centers worth $705M from Entel Data Centers in Chile and Peru

Equinix, a global colocation and interconnection provider has announced its interest to expand the operations in Chile and Peru by buying four data centers from a Chilean telecommunications provider, Empresa Nacional de Telecomunicaciones (Entel) for an enterprise value of $705million. Pointedly Equinix’s acquisition includes three data centers in the metropolitan area of Santiago, Chile, and might include one data center in Lima, Peru, but the definitive agreement is yet pending.

Entel’s four data centers make approx. $53M revenue per year. In addition to Equinix’s SG&A expenses, Entel’s business might have generated approx. $30.7M of adjusted EBITDA in 2021, which indicates a 58% margin. Thus, Equinix is acquiring Entel’s data centers at the monetary value of approx. $23x EV/2021 adjusted EBITDA.

Finally, the acquisition is predicted to close in Q2 2022 subject to closing circumstances. Upon its close, Equinix anticipates the acquisition from Entel will be immediately assertive to its adjusted funds from operations (AFFO) per share, but excluding Integration cost.

Chile is America’s fourth-largest economy provider, by having the region’s highest GDP per capita. Santiago is still establishing itself as a South American technological powerhouse, that caters to both regional cloud and content demand as well as local businesses.

As per the IDC prediction, Latin America’s enterprise edge expenditure is estimated to reach $8.573 billion by 2024, which means a double digital growth in Chile over that time. Additionally, IDC forecasts a 34.6% growth in cloud investment in Chile between the period 2020 and 2024.

Equinix will create its position as a regional provider of digital infrastructure services, with these new data centers that will provide coverage in the critical market.

The aim is to expand the potential for future development in Santiago, Chile, and three data center locations, that allow Equinix to support both immediate and future growth in the region. Together both Equinix and Entel, have agreed to develop a strategic collaboration that will enable organizations in Chile and Peru to use Hybrid Multicloud Solutions. This will ultimately speed up their digital transformation, as per the norms of the agreement.

Charles Meyers, President, and CEO at Equinix said, “Latin America has an enormous potential market and we are committed to the region, by providing exponential growth since we entered back in the year 2011. Chilean, Peruvian, and other multinational companies desperately want the digital infrastructure to thieve their today’s economy. Thus, with this expansion, we are broadening digital access and accelerating digital transformation across Latin America, by maintaining growth in a responsible and sustainable manner”. 

Chile & Peru Data Centers 

All the three data centers in Chile are situated in the Santiago metropolitan region and have different strategic characteristics like: Santiago’s largest multi-tenant data center, known as Ciudad de Los Valles facility has plenty of rooms for development.

The downtown Santiago location is situated in the heightened security environment, which is a network-dense facility near the Entel Tower. It is an important IX facility in the market, and close to the local government center.

Longovilo’s facility is positioned very strategically away from the city core so as to satisfy financial institutions’’ backup and disaster recovery needs.

Also, the Peruvian data center is a well-established Tier III facility located in Lima, Peru’s capital.

Equinix is expanding its platform to the Southern Cone in order to extend its presence in five countries in Latin America, along with Brazil, Chile, Colombia, Mexico, and Peru which will operate 15 international Business Exchange (IBX) data centers in seven metros. In addition to this, the company will have its presence in all the countries of the Pacific Alliance, a trade block formed by Chile, Colombia, Mexico, and Peru with an aim to integrate these markets and achieve free mobility of goods, services people, and other resources. Ever since, 2011 when Equinix first entered the region, it has invested around $1.2 billion in its Latin America operations.

The four data centers generated roughly approx. $53 million revenue in a year and have a 23x EV/2021 adjusted EBITDA that includes Equinix SG&A expenditure buy multiple.

Under the terms and conditions of the arrangements, about 120 Entel workers and contractors will become Equinix employees or contractors.

Antonio Büchi, Chief Executive Officer (CEO) at Entel, said this strategic partnership with Equinix, which is known as a world-leading digital infrastructure company, has allowed us to focus our resources on businesses that actually add value to our customers. Enter has evolved and transformed over the years, and this partnership for us is intended to set a milestone in our strategic plan which is more than just an infrastructure transaction. We have a plan to extend our offerings and deliver digital services and expertise with new solutions to accelerate our client’s digital transformation.

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