Savvis Expands in Europe

Savvis Inc., a subsidiary of CenturyLink, Inc. (CTL - Analyst Report), has initiated its data center expansion in Continental Europe with the opening of a data centre in Frankfurt, Germany.

The new data centre would offer Savvis customers with low-latency connections to almost 150 international carriers coupled with strong connectivity to trading systems of the Frankfurt Stock Exchange.

Further the new datacenter would provide Savvis Symphony Dedicated private cloud service along Savvis Symphony Virtual Private Data Centre (VPDC) public cloud services, which will be launched in early 2013.

CenturyLink expects the entry into the mainland European market with the new data center in Frankfurt will represent a significant step forward as it taps a potential growth opportunity.

CenturyLink entered into the cloud computing business after acquiring Savvis Inc. in July 2011. The acquisition strengthened CenturyLink’s footprint in hosting managed cloud services business to 51 data centers in North America, Europe and Asia. The company continues to expand data centers this year with a view to generating higher revenue growth in collocation as well as managed hosting and cloud services. The acquisition bequeathed several additional benefits along with greater scale and operational efficiencies, providing the company with a competitive edge over its rivals

However, stiff competition from other low cost telecom operators’ like LEAP Wireless International Inc. (LEAP - Analyst Report) and significant integration challenges coupled with increased operating expenses resulting from the acquisitions may impede the company’s operating performance going forward.

We maintain our long-term Neutral recommendation on CenturyLink Inc. The stock also has a Zacks #3 Rank, implying a short-term Hold rating.