Rostelecom may become a monopolist in the data center market

The state-owned company Rostelecom is considering the possibility of buying the second-largest Russian company in the data center market. We are talking about DataLine, the cost of this company is estimated at $ 500-600 million, excluding debt. Reports about it "Kommersant". If the transaction is implemented, Rostelecom will receive about 30% of the market, becoming, in fact, a monopolist.

The market of data centers in Russia is now actively developing, as the demand for cloud services and DC is growing in connection with government initiatives, such as the “Spring Law” and the creation of “Gosslak” for the authorities.

Previously, one of the bidders for the purchase of DataLine was MTS, but now the main bidder for the purchase is Rostelecom.

The cost estimate of DataLine is made according to the method, where EBITDA (pre-tax profit) is taken into account. Abroad, the value of the operating company DC is defined as 18 EBITDA. In Russia, the multiplier is approximately 9-11 EBITDA. The price tag is lower due to higher bank rates. If Rostelecom buys DataLine, it will control about 10-12 thousand racks, taking the first place in Russia for this indicator.

Third-party experts agree with the DataLine business assessment. According to experts, the DataLine business as a data center service provider costs approximately $ 200-250 million, plus the cloud business of the company. “It looks like the amount of the transaction has increased due to a number of premiums, such as the final position of Rostelecom in the market after the merger and the debt component, which reduces the required amount of cash money when buying,” said one of the sources of Kommersant.

The analytical company TMT Consulting estimates the volume of the Russian market of commercial data centers at 26.4 billion rubles. From 2017 to 2018, the growth of the market volume was 13%. The number of stand-ups increased to 38.8 thousand, in percentage terms - by 10.2%. This year, analysts expect even more active growth - by about 15% in money and by 17% in strongholds. The market leader is Rostelecom, which owns 5,868 positions. In second place is DataLine with 4787 racks.

Seeing the growth of the market, large companies are actively investing in the sphere of data centers, including telecom operators of federal significance. So, in early January of this year, MTS acquired 100% of the cloud provider IT-Cloud 1 Cloud, paying about 2.5 billion rubles. In September 2018, the same company acquired the data center "Avantage", which owned the site for the placement of 2240 racks, for 8.9 billion rubles.

According to market participants, the merged company Rostelecom -DataLine may be in the position of a monopolist. After the merger, the share of Rostelecom in the data center market will reach 25-30% with opportunities for further growth. The deal will change many of the rules of the game on the cloud providers market, it will become more dependent on the actions of just one participant.

The high market activity is due to the state-chosen course for digital transformation. In the next few years, the state plans to implement several major initiatives in this area at once. One of the most ambitious tasks is the implementation of a program for the development of the digital economy. The section “Information infrastructure” can become the most expensive and massive stage. More than 413.4 billion rubles will be allocated to this section.

In addition, an important point in terms of the development of the data center market is the “Spring Law”. Earlier it became known that large operators could not only suffer losses, as previously thought, but even make a profit. The point is that federal telecom operators are planning to provide regional data storage services. This opportunity is being considered by Megafon. Representatives of the operator said that they receive a large number of requests from regional companies asking for data outsourcing.

According to Telecom Daily, Rostelecom’s monthly income from leasing its data centers to other operators can reach hundreds of millions of rubles. And this service will be in demand, since small companies that do not have their own fleet of servers will have to turn to larger partners. All telephone conversations, text messages, images, sounds and even video recordings will have to be stored.

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