Excited doesn’t even begin to describe how we feel about opening our first three Equinix International Business Exchange™ (IBX®) data centers in Mexico. We’re thrilled! As are our multinational customers who are eager to expand their businesses into Mexico, Latin America’s second largest economy and the eleventh-largest economy in the world.[i] The acquisition of three Axtel S.A.B. de C.V. (BMV: AXTELCPO) data centers that serve the Mexico City and Monterrey metro areas for US $175 million in cash was finalized today. We are pleased to announce that the MX1 and MX2 (Queretaro) and MO1 (Monterrey) data centers are now open for business to companies around the world.
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The Axtel acquisition adds approximately 115,000 square feet of vendor-neutral colocation space to our IBX data center portfolio. As the second-largest data center platform in Mexico in terms of power capacity (8.5 MW of combined built-capacity), Equinix is now one of the largest network-neutral data center operators in Mexico. The three new Equinix IBX data centers also provide a pivotal gateway for Mexican businesses looking to globally expand their reach via Platform Equinix® and its more than 200 IBX data centers in 54 metros around the world.
LATAM’s digital transformation is driving digital ecosystems and interconnection
With a gross domestic product (GDP) of US $1.2 trillion in 2018, Mexico’s top GDP drivers have been centered on agriculture, construction, manufacturing and mining.i However, Mexico’s growing technology sector cannot be ignored. As of 2018, approximately 71% of the Mexican population (82.7 million users) was on the internet, up 4% from 2016.[ii] As more users get onto the internet, it opens up new opportunities for content delivery providers, including online gaming, social networks and digital media and entertainment, as well as the content delivery networks that support them.
Mexico is Latin America’s second largest economy and the eleventh-largest economy in the world.
According to Héctor Nava Cortinas CEO Totalplay Empresarial, “We live in a digital age where everything and everyone is increasingly connected. The growing amount of data, combined with advances in mobile communications, is increasing the need for users to have continuous access to information and content. For Totalplay Empresarial, it is essential to provide the best possible experience for our customers. Equinix is a trusted partner in delivering our services in the United States and Colombia, providing unique interconnection services. Now with its expansion to Mexico, we look forward to extending our operations further on Equinix’s global platform.”
Private interconnection growth in Latin America is also an indication of wide-spread digital transformation within companies, which results in exponentially more data being exchanged between businesses in this growing region. According to the third annual Global Interconnection Index (GXI), a market study published by Equinix, Latin America is estimated to have the strongest regional interconnection bandwidth compound annual growth rate (CAGR) in the world at 63% by 2022 – driving greater investment in its internet infrastructure. The top four LATAM metros (São Paulo, Rio de Janeiro, Buenos Aires, Mexico City) are expected to equate to 77% of overall Latin American interconnection traffic by 2022, with Mexico City’s interconnection bandwidth growing at a rate of 52%.
The top five industries that are expanding in Latin America based on interconnection growth include Content & Digital Media, Banking & Insurance, Cloud & IT Services, Manufacturing and Telecommunications. Interconnection to partners within these industry ecosystems is also growing on Equinix’s interconnected platform worldwide, with its more than 10,000 customers, giving Mexican businesses a launching pad into these dense digital and business ecosystems on a global scale.
Equinix’s expansion in LATAM is tracking with this incredible growth, with IBX data centers in Bogotá, Columbia, and Rio de Janeiro and Sao Paulo, Brazil. In addition to the LATAM regional presence, businesses in these data centers can gain direct and secure access to dense network, cloud, SaaS and vertical industry ecosystems in Equinix, vendor-agnostic IBX data centers in metros, such as Los Angeles, Dallas and Miami, which are critical gateways into the U.S. markets. And on Equinix’s globally interconnected data center platform, LATAM businesses can gain access to the rest of the world.
A global gateway to the cloud
LATAM is still a greenfield for cloud adoption. According to the GXI Volume 3, enterprise interconnection growth to Cloud & IT Service Providers in LATAM is expected to grow by 148% CAGR between 2018 and 2022. Today in Mexico, most of the communications networks are still terrestrial in nature, so as fiber networks become more ubiquitous, so will cloud service providers (CSPs) in Mexico.
As we roll-out Equinix Cloud Exchange Fabric™ (ECX Fabric™) in the region, it will provide more on-ramps to leading CSPs, as well as act as a gateway for reaching leading cloud provider instances in other regions around the world. Our IBX facilities will be the first and only platform in Mexico with direct and secure connection to AWS and Azure Microsoft Express Route. And our new Mexico facilities are also located at the heart of the Axtel telecommunications network, with access to other major carriers and network service providers, a requirement for accelerating enterprise cloud adoption.
In addition, subsea cable routes from LATAM countries, such as Google’s Curie subsea cable system from Chile that lands directly at the Equinix LA4 data center in El Segundo, CA, enables Mexican businesses to extend their reach beyond their boards. These subsea cable systems that land within our global IBX data centers open up routes for exchanging data traffic and workloads between enterprises and CSPs, NSPs and other business partners and customers around the world on Platform Equinix.
From acquisition to managed services partnership
Moving forward, we will be partnering with Axtel to offer their managed services capabilities to our customers on Platform Equinix worldwide. Listing them as a network and managed service provider on Equinix Marketplace will give them visibility with Equinix customers around the world, including those multinationals that would like to do more business inside of Mexico.
The opening of our data centers in Mexico is the perfect way for us to start a new decade and continue our Americas and LATAM expansion story.
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[iii] Interconnection bandwidth is defined as the total capacity provisioned to privately and directly exchange traffic, with a diverse set of partners and providers, at distributed IT exchange points inside carrier-neutral colocation data centers.