CoreSite

CoreSite is a real estate investment fund that invests in data centers that are independent of telecom operators and provides colocation and peer-to-peer services.

History

2021: American Tower bought CoreSite for $10.1 billion

On November 15, 2021, American Tower announced the acquisition of CoreSite for $10.1 billion. The perimeter of the transaction included cloud transitions, gateway connections and 25 data-processing centers (DPC) to the USA. American Tower expects the CoreSite deal to close before the end of 2021.

American Tower plans to use the hub and spoke model, a form of optimizing the transport topology in which traffic planners organize routes in the form of a series of spokes that connect remote points to a central hub. The evolution of edge networks involves the constant migration of workloads to the cloud and the edge processing of data for future applications that require very low latency. Using its distributed communications real estate assets to create a market in the fringe space is something that American Tower has been striving for since 2019 and has already made small acquisitions and started trial testing in this area.

American Tower acquired CoreSite for $10.1 billion

During a telephone conversation about the acquisition, American Tower executives previously said that by 2026 the mobile border market will amount to $1 billion, and the city border market, $2 billion. However, Wells Fargo noted that these figures are small compared to the existing retail placement and hyperscale data center business, which, according to the company, is $50 billion per year and continues to grow. American Tower towers are used by several operators, since the company is a supplier of neutral communication infrastructure. The company's management clearly stated that it considers a neutral host as the most effective way to provide border data centers.

American Tower said the deal does not impede their partnership, but analytics firm Wells Fargo believes it will become more difficult if other companies now view the tower company as a competitor rather than a direct partner. Wells Fargo also considers Equinix a stronger partner than CoreSite or other players, especially if it is assumed that opportunities for expanding borders are global.

Risks increase if American Tower tries to bring CoreSite to new countries, since the company does not have experience working abroad, and it is very difficult to develop such network ecosystems from scratch. As MoffettNathanson analyst Nick Del Deo noted, you can imagine a lot of potential difficulties compared, say, with the addition of additional towers in existing or related markets.^[1]

Notes