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05/09/19

21:15

Post #: 40330262
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Originally posted by TimmyO: ↑

I’m no expert in this area but from the research I have done over the years since being a holder in this, many day that DCs are a real estate play. It’s very hard to get suitable facilities or sites that are suitable in prime locations in CBDs and key business parks.

Think location, location, location....it’s not easy getting site in close proximity to the major customer base that has all the right attritbutes for security, power etc.

I think you will find NXT was a first mover in securing prime locations in each major city.

You talk about latency..most financial service businesses are based in the heart of the CBD. NXTs locations are suitable for critical applications I would think so a niche player playing in a slight different part of the market. Customers aren’t going to move out to a large industrial park where a google, Amazon or Microsoft will have a Hyperscale.

These players will find it difficult to scale with suitable sites in close proximity to CBDs. I’m sure they’ve been successful in securing sites in some places so that’s a generalization. But overall NXT will have some enviable sites which will also serve as on-ramps to the large players using services like Megaport.

This is what concerns me about expansion into Asia for NXT. They might be able to build a good data centre with their capabilities but the days of securing the key sites in cities....which was really Bevans vision and value prop and why NXT has done so well to date. I would think this is now gone and other Asian players will make the market and economics tougher by bidding up the sites.

Theres nothing wrong for NXTs strategy being to secure long term customer in Aus to have fully utilised assets in spinning cash and returning to shareholders. In turn they will become an attractive proposition for infra funds which may lead to an attractive takeover price.

A lot of time global expansion doesn’t play off and best left to the local players.

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Good summary @TimmyO.

If we are talking takeovers I suspect it would come from the BIG kids on the block: AirTrunk and Global Switch.

For the time being, I think hyperscalers are very happy to partner with DCs. Take for example the partnership of Microsoft Azure with Canberra Data Centres in the Nation's Capital.

Partnerships for co-location of facilities can be mutually beneficial.

What do you think is the main reason that NextDC is in the top 15 most shorted stocks on the ASX?

NXT Price at posting: $6.11 Sentiment: None Disclosure: Not Held
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