Back to top

Image: Bigstock

Equinix (EQIX), Southern Cross Duo Boosts Digital Infrastructure

Read MoreHide Full Article

In a world where digital transformation is paramount, Equinix (EQIX - Free Report) has once again proven itself as a pivotal player in the global digital infrastructure landscape. The company recently announced an expanded partnership with Southern Cross Cables Limited to serve as a vital U.S.-based interconnectivity access point for the Southern Cross NEXT (“SX NEXT”) submarine cable system. This development is set to redefine digital connectivity among Australia, New Zealand and the United States while addressing the growing demand for low-latency, high-capacity subsea cables.

As we continue to witness an explosion in global digital traffic, it's important to note that 99% of intercontinental telecommunications traffic is routed through submarine fiber-optic cables, with less than 1% carried through satellite systems. This underlines the critical role subsea cables play in today's interconnected world. In this context, Equinix's collaboration with Southern Cross holds immense significance.

The SX NEXT cable offers the lowest latency path from Australia and New Zealand to Los Angeles in the United States. By connecting to Equinix's LA4 Los Angeles International Business Exchange (“IBX”) data center, it enables rapid provisioning and cost savings for Southern Cross.

Moreover, the SX NEXT cable boosts network performance across multiple industries in the region and bolsters the aggregate capacity of Southern Cross' existing Trans-Pacific ecosystem by an impressive 500%. This move aligns perfectly with Equinix's strategy of providing state-of-the-art subsea infrastructure.

This partnership builds upon the strong relationship between Southern Cross and Equinix, which has been nurtured over time due to Equinix's global presence, expertise in subsea infrastructure and access to vibrant ecosystems of networks, clouds, financial and IT service providers. Southern Cross also leverages Platform Equinix to offer critical on-ramps to the Southern Cross network ecosystem in Sydney's SY1 and SY5 data centers, as well as Silicon Valley's SV1 and SV8 and Los Angeles' LA1.

The decision to enhance the connectivity among Australia, New Zealand and the United States is driven by the surging demand for cloud services, content delivery, digital media and e-commerce capabilities. The Australian digital economy has matured significantly, and content providers emerged as the primary trans-Pacific bandwidth consumers, accounting for nearly 78% of bandwidth in 2022. This shift began in 2015, marking a transition from internet backbone providers dominating the market.

The trans-Pacific demand has been growing at a staggering CAGR of 41% over the past five years, surpassing the 26% CAGR of internet backbone providers. To further support this growth, the Australian government is investing significantly in digital infrastructure.

Equinix's involvement in subsea cable projects dates back to 2015 when it entered the business. Since then, the company has won 50 subsea cable projects, underscoring its expertise in the field. More than 50 Equinix metros are cable landing station (CLS)-enabled, meaning they are strategically located close to coastlines to support CLS deployments. This strategic positioning allows Equinix to serve as the crucial gateway between continents, facilitating seamless data exchange for organizations worldwide.

As the world moves toward a data-driven future, the importance of interconnection bandwidth becomes increasingly evident. The Global Interconnection Index 2023, published by Equinix, forecasts the global interconnection bandwidth to reach a staggering 27,762+ terabits per second by 2025. This represents a five-year CAGR of 40%. This demonstrates how organizations are investing in future-proof infrastructure on technology platforms to meet their evolving connectivity needs.

With a footprint of 250 IBX and xScale data centers in 71 global markets across 32 countries, Equinix provides the metro edge points of presence required to deliver low-latency interconnection for transporting rising volumes of internet traffic. Its expanded relationship with Southern Cross through the SX NEXT submarine cable system underscores its pivotal role in advancing global connectivity. As the world continues to rely on subsea cables for intercontinental data exchange, EQIX's expertise and commitment to sustainability make it a critical partner in shaping the future of the digital economy.

Shares of this Zacks Rank #3 (Hold) company have risen 4.1% in the past six months against the real estate market’s decline of 2.1%.

Zacks Investment Research
Image Source: Zacks Investment Research

Stocks to Consider

Some better-ranked stocks from the REIT sector are SBA Communications (SBAC - Free Report) and Americold Realty Trust (COLD - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for SBA Communications’ current-year FFO per share has moved marginally northward over the past month to $12.90.

The Zacks Consensus Estimate for Americold Realty Trust’s ongoing year’s FFO per share has been raised 2.4% upward over the past month to $1.26.

Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.

Disclaimer: This article has been written with the assistance of Generative AI. However, the author has reviewed, revised, supplemented, and rewritten parts of this content to ensure its originality and the precision of the incorporated information.

See More Zacks Research for These Tickers

Normally $25 each - click below to receive one report FREE:

Equinix, Inc. (EQIX) - free report >>

SBA Communications Corporation (SBAC) - free report >>

Americold Realty Trust Inc. (COLD) - free report >>

Published in