Telecity has released a positive trading update covering the Jan-to-March quarter. The UK-based co-location player says that it “delivered a good performance in the first quarter in terms of growth in revenue, EBITDA and EPS”.
As we and many other commentators have said for a while (see, for example Telecity: co-location, co-location, co-location), Telecity is among the leading beneficiaries in the UK and Europe of the continuing rapid growth in network traffic. Its positioning in major cities means it has scarce capacity and connectivity in places where there is sustained demand coming from service providers and corporates.
There will no doubt come a day when internet traffic growth and co-lo demand flatten off. But for now, trends such as the ever-growing use of ever-higher definition video and ever-improving broadband speeds for many businesses and households mean that the demand outlook for Telecity remains positive for the foreseeable future. Hence the company’s continuing Capex investment in data centre expansion and the popularity of the company’s shares, which currently trade at a P/E ratio of 37, with many investors.