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Digital Realty (DLR) Unit Chosen to Land PEACE Cable in France

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Zacks Equity Research
·3 min read
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Digital Realty Trust’s DLR unit — Interxion —  has struck a deal with PCCW GLOBAL to offer a submarine cable gateway in Europe for Pakistan and East Africa Connecting Europe (PEACE) subsea cable system. This will allow the subsea cable to locate termination and interconnection equipment in Interxion's MRS2 data center in Marseille, France.

The collaboration is a strategic expansion of both Digital Realty’s PlatformDIGITAL and PCCW global's software defined interconnection platform Console Connect. The platforms facilitate fast and efficient deployment and management of hybrid IT services for customers.

Also, it will provide low-latency access to more than 160 connectivity providers along with numerous content, cloud, gaming and video streaming platforms. Further, since the PEACE cable will be the 15th subsea cable system landing in Marseille, it will improve the value of Network Hubs deployed on PlatformDIGITAL.

The cable system spanning 15,000 km will offer high capacity, low-latency routes that will connect China, Europe and Africa. The cable will also land in Malta, Cyprus, Egypt, Djibouti, Kenya, Pakistan and other markets with onward terrestrial connectivity to China.

Interxion's data center campus in Marseille is one of the preeminent global digital hubs for intercontinental data traffic and has diverse ecosystem connectivity providers, digital media and cloud segments. This has likely made it an appropriate choice for PEACE subsea cable to interconnect with a data center.

Per management at Interxion, "This collaboration with PEACE and PCCW Global not only solidifies Marseille's future as an intercontinental hub with access to state-of-the-art communication services, but also affords Interxion's global customer base entry into new markets and the ability to connect their often geographically dispersed infrastructure in close proximity to the connected community via PlatformDIGITAL".

Ultimately, data center facilities at the intersection of numerous networks have the ability to provide high-value, network-based colocation and interconnection services. Hence, with PEACE subsea cable interconnecting to Interxion's MRS2 data center, Digital Realty is likely to command higher rent and realize benefits of network effects. 

Shares of this Zacks Rank #3 (Hold) company have gained 7.9% over the past year against the industry's decline of 8.7%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.


Notably, along with increased spending on “digital office spaces” amid the pandemic-led work from home environment,growth in cloud computing, Internet of Things and big data are driving demand for data-center REITs, including Digital Realty, Equinix, Inc. EQIX, CyrusOne Inc. CONE and CoreSite Realty Corporation COR.

However, Digital Realty faces stiff competition from several data-center developers, owners and operators, many of which enjoy the ownership of similar assets in locations same as the company. As the data-center market has the potential for further growth, these REITs remain under aggressive pricing pressure.

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