ST Telemedia


ST Telemedia Strengthens its E-Service Focus through a Major Stake in Equinix

Oct 2002 / Press Releases
  • ST Telemedia becomes the largest strategic shareholder of Equinix through the investment of new capital and its i-STT business

Singapore, 2 October 2002 - Singapore Technologies Telemedia (ST Telemedia), a leading information-communications group in Singapore, today announced it entered into definitive agreements to invest US$30 million and merge its wholly-owned Internet infrastructure service business, i-STT, into Equinix (Nasdaq: EQIX), a leading provider of core Internet exchange services. Additionally, Pihana Pacific will integrate its Internet exchange service business into Equinix. The investments will result in ST Telemedia becoming the largest strategic shareholder in the new entity, which will be the largest global network neutral Internet exchange service company. The combined entity will operate as Equinix, which is publicly-listed on Nasdaq. The investment in Equinix is expected to provide a number of strategic benefits to ST Telemedia, including:

- Reinforcing ST Telemedia’s vision to be a significant global data and IP-centric communications group
- Enhancing ST Telemedia’s business in Internet infrastructure and exchange services through expanded geographical reach, services and customer base
- Establishing strong presence for ST Telemedia in key U.S. and Asia-Pacific cities
- Increasing ST Telemedia’s presence in one of the fastest growing segments in the telecommunications/ IT industry

Industry Leader in Global Internet Exchange Services

Consistent with its strategy to become a significant global data and IP-centric communications group, Equinix will immediately transform ST Telemedia’s largely domestic managed hosting and infrastructure services business into the largest global network neutral Internet exchange service company with a total footprint of over one million square feet across 14 Internet Business Exchange (IBX) centres in six countries. The major strategic shareholding in Equinix ensures that ST Telemedia remains at the forefront of developments in the Internet infrastructure and exchange services segment. ST Telemedia, through Equinix, will be able to instantly offer a broader range of international services and solutions to its existing and prospective customers, and have access to more than 400 global customers, including AT&T, EDS, Goldman Sachs, IBM, Kyocera, Qwest, Royal & SunAlliance, Sony, and Yahoo!

Strong Presence in Key Markets

Equinix will combine the Internet exchange centres of i-STT and Pihana. Equinix is a market leader in network neutral Internet exchange services in the U.S. with the largest number of leading domestic and international network providers in one single company. Pihana is recognized as the first company in Asia-Pacific to build, brand and manage world-class network neutral Internet data centres. The investments in Equinix will enable ST Telemedia to instantly establish a strong and strategic presence in key U.S. and Asia-Pacific cities.

Poised to Capitalize on One of the Highest Growth Segments in the Telecommunications/ IT Industry

Industry analysts have projected global hosting revenue (including co-location and managed services) to grow from US$9 billion in 2001 to US$50 billion in 2005 (Source: Yankee Group, 2001). U.S. hosting revenue is forecasted to grow at a CAGR of 33.9% from US$4.8 billion in 2001 to US$20.8 billion in 2006 (Source: IDC, 2002). In Asia Pacific, hosting revenue is projected to grow at a CAGR of 29.9% from US$1.5 billion in 2002 to US$2.9 billion in 2005 (Sources: Morgan Stanley Dean Witter, UBS Warburg and IDC). Mr Lee Theng Kiat, President & CEO of ST Telemedia said, “This investment, together with our recent investment in Global Crossing, reinforces our vision to become a significant global communications group.

The merger of Equinix, Pihana and i-STT is an excellent strategic fit of assets, technology and management skills. i-STT is focused on developing profitable and world-class Internet data centres (IDC). Its Singapore IDC is currently a market leader in the Asian region in terms of quality facility and solutions. Equinix’s senior management team possesses a vast wealth of international telecommunications experience having worked in leading technology and communications companies across the Asia-Pacific region and the U.S.”

“With the financial strength of ST Telemedia, unmatched global Internet exchange and infrastructure services, and an experienced and committed management team, Equinix will be in a formidable position to differentiate itself strategically and operationally, and to provide unrivalled Internet services over a worldwide, secure Internet exchange infrastructure platform,” added Mr Lee.

“The addition of ST Telemedia as a large strategic investor reinforces Equinix’s position as the world’s leading provider of Internet exchange services,” said Peter Van Camp, CEO of Equinix. “This strategic investment and the merger of the Asia-Pacific assets into Equinix will catalyse the next phase of Equinix’s growth into a leading global provider of Internet exchange and infrastructure services. As a financially secure business with a healthy cash position and broadened services portfolio, Equinix is in a unique position to deliver unmatched Internet exchange and infrastructure services to its growing customer base, while building a profitable company and increasing shareholder value over the long-term.”

Transaction Details

Upon closing, ST Telemedia will invest US$30 million in new capital and the i-STT business in Equinix for a major equity stake of approximately 28% before conversion of the ST Telemedia-convertible debt and warrants. The capitalization of the company post-conversion and post-warrant would be as follows: existing Equinix shareholders would hold approximately 24% of the company; STT would hold approximately 48%; Pihana Pacific shareholders would hold approximately 15%; and the bondholders would hold approximately 13%. The new company will be led by Equinix’s current CEO, Peter Van Camp. It will remain headquartered in Mountain View, California, with the Asia-Pacific headquarters to be located in Singapore. Subject to the satisfaction of certain closing conditions, the transaction is expected to complete by the end of this year.