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Piemonte maintaining Brazil investment plans, readies new acquisitions

Bnamericas Published: Monday, October 24, 2022
Piemonte maintaining Brazil investment plans, readies new acquisitions

Piemonte Holding, the investment group behind Brazilian datacenter company Elea Digital, plans to invest 500-600mn reais (US$95-US$113mn) next year, in line with its investments in the last couple of years, Piemonte founder and CEO, Alessandro Lombardi, told BNamericas.

That projected budget does not include expenditures on acquisitions, which have been the main pillar for the group’s expansion strategy to date, and the money will instead go towards organic growth, updates and the conclusion of retrofits at its existing sites. 

Even so, new M&As are being readied and could still take place this year, said Lombardi, although he did not go into further detail.

Elea’s most recent purchase was a datacenter owned by Brazilian carrier TIM in Porto Alegre, the capital of Rio Grande do Sul state. The values for this transaction were not disclosed. 

Piemonte/Elea previously spent 325mn reais (currently US$61mn) to buy a set of five datacenters from another big Brazilian national telco, Oi, one of which is also in Porto Alegre, as part of Oi’s process to shed certain assets.

Another datacenter acquired by Elea, located in Rio de Janeiro, used to belong to Brazil’s powerful media giant Globo. At present, Elea has seven datacenters: Curitiba (CTA1), São Paulo (SPO1), Brasília (BSB1 and BSB2) and Rio de Janeiro (RJO1), in addition to the two in Porto Alegre.

All of these sites have around 20MW of total installed power capacity and capacity occupancy rates of close to 75%, according to Lombardi.

“Our vocation of edge, the way we do it, the others who are coming to the market don't do that – I mean, serving both networking and the local market," he said. 

FEDERATION

The distribution of smaller, decentralized datacenters across the main metropolitan regions in the country is part of a strategy of having a “federalized” network comprising 10-12 sites across Brazil. For now, however, Elea's datacenters have been concentrated in the mid-south of the country.

“Our team went to the northeast twice this month. We've been looking at the northeast longer than the south,” said the executive about investments in other parts of the country.

Asked about further acquisitions of datacenters from local telcos, Lombardi said that there are no talks currently taking place with TIM, but the group is analyzing various assets, whether that involves other TIM sites or facilities owned by rival telcos, such as Claro or Embratel.

In most cases, these datacenters were not immediately for sale and the acquisition processes were initiated by Elea itself, according to the executive.

With respect to Porto Alegre, having two datacenters in that city was important for redundancy and disaster recovery purposes. Furthermore, according to Lombardi, the company's first datacenter there already was full of clients and was close to 100% capacity.

As part of the sale agreement, Elea will continue to provide services to Telecom Italia, which owns TIM, through the site for the next few years.

In addition to telcos and media companies, sites of mid-sized to large IT managed services companies, as well as those of private cloud players could be seen as interesting assets to be integrated into Elea's portfolio, according to Lombardi.

The focus for the coming year, however, will be mainly on strengthening the capacity of current sites. “I can tell you that 2023 will be mainly dedicated to organic growth,” he said.

Meanwhile, the process of retrofitting datacenters is practically finished, despite the delays in the arrival of new equipment due to the pandemic, he added. 

Lombardi said that the company is upgrading its systems with the target of reaching a power usage efficiency (PUE) of around 1.5 in all its datacenters. 

That rate is calculated by dividing the total facility power (the power entering the site) by the IT equipment power (the power effectively used to run the machines).

Vertiv is one of Elea's chief equipment suppliers, providing cooling and air conditioning gear. Elea also relies on machinery from Caterpillar, Schneider Electric and Honeywell, among others.

LATIN AMERICA

While Piemonte’s federation plan continues to be focused on Brazil, expansions to other countries in Latin America, primarily on the Atlantic coast, are also being analyzed, the executive said.

"We can naturally think of Uruguay and Argentina. Also Colombia, Guatemala and even Panama. And from there, then yes, going down to Peru and Chile."

The priority in these cases is regions that can enable interconnectivity with international submarine routes, whether existing ones or routes that are in the planning stage.

“Uruguay is interesting for the datacenter sector due to the relatively lower cost of energy [compared with other markets]. And our strategic studies indicate that, Porto Alegre will be an important point of arrival for submarine cables.”

Porto Alegre is not yet a relevant site for submarine cables in Brazil, as the main anchor cities in the country are Fortaleza, Rio de Janeiro and Praia Grande.

But Lombardi says that international players have are projects in the making with Porto Alegre as a landing station, arguing that "it's a matter of months, not years."

Uruguay receives various cables such as Tannat/Monet, operated by a consortium formed by Angola Cables, Google, Brazil's Algar Telecom and Uruguay’s Antel, in addition to the legacy Unasur and Bicentenario systems.

Google also intends to go live in 2023 with Firmina, a cable for its own exclusive use, connecting South America to the US through the Atlantic and with Punta Del Este as one of its landing points.

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