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Digital Realty (DLR) Unit Picked for UK-France Interconnection

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Recently, Digital Realty Trust’s (DLR - Free Report) unit — Interxion — was picked by Crosslake Fibre, to support direct interconnection from Interxion's Paris Campus to the CrossChannelFibre System.

This will likely be operational by the end of 2021 and facilitate new open interconnection options for financial, wholesale, large enterprise and cloud customers in the U.K. and France.

Markedly, Interxion's Paris campus is one of the leading digital business hubs comprising seven data centers which are home to a booming community of networks, enterprises, content providers, financial, gaming, and media companies. It is going through major expansion with the construction of the Interxion Paris Digital Park, and will offer a landing point for subsea cables, such as the CrossChannel Fibre System.

Remarkably, the 520-kilometer cable is the first fiber-optic subsea cable to be built across the English Channel in nearly 20 years. Enhanced technical solution of the CrossChannelFibre System will lower operating costs, leading to added value to Digital Realty's global platform PlatformDIGITAL®. Customers will benefit from CrossChannelFibre System's diverse routing between Paris and the U.K., high capacity and low latency.

With growth in cloud computing, Internet of Things and big data, and an increasing number of companies opting for third-party IT infrastructure; data-center REITs are seeing a boom market. Also, the estimated growth rates for the artificial intelligence, autonomous vehicle and virtual/augmented reality markets will be robust over the next five to six years.

Demand is strong in top-tier data center markets and despite enjoying high occupancy, the top-tier markets are absorbing new constructions at a faster pace. These are anticipated to spur demand for data centers. Also, data centers are poised to benefit from the heightening reliance on technology in the wake of the coronavirus pandemic. Thus, data-center landlords like Digital Realty, Equinix, Inc. (EQIX - Free Report) , CyrusOne Inc. (CONE - Free Report) and CoreSite Realty Corporation (COR - Free Report) will keep witnessing significant demand.

Banking on such factors and backed by a healthy balance sheet, Digital Realty is expanding its portfolio on accretive acquisition and development efforts, growing its presence outside America. However, aggressive pricing pressure might prevail in the upcoming period amid the competitive landscape. In addition, investors’ sector rotation sentiments post-vaccine are inducing hiccups.

Digital Realty currently carries a Zacks Rank #3 (Hold). In the past three months, the company’s shares have gained 2.8%, underperforming the industry’s rally of 10.5%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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