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Zayo Group Holdings Inc (NYSE:ZAYO) Hired By a Global SaaS Company to Provide Colocation Space

Zayo Group Holdings Inc (NYSE:ZAYO) has been picked to provide data center collocation by a global software as a service company. Zayo Group Holdings will be tasked with ensuring the company with collocation space to link up with its locations.

The SaaS company was fishing for a collocation operator that will provide secure, industry-grade connectivity between its locations- and Zayo matched the description. Through the agreement, the company will be able to access a secure additional collocation space and operating power next year.

Demand for SaaS Raising Colocation Demands in Return

As adoption for “as a service” solutions ramps up, SaaS providers are increasing their dependence on data centers on connecting its multiple locations effectively.

Zayo Holdings is one of the companies that has adequately prepared for the market demand. The group recently expanded its Data Center presence to the East Coast. The new facility adds more than 47,000 square feet boasting critical power of up to 5 Megawatts (MW).

The East Coast center was developed to address increasing customer demands in the region considering that it tethers to Zayo’s data center at 165 Halsey St. in Newak with a link to several carrier hotels and over a thousand data centers worldwide.

With the new facility, Zayo’s data center portfolio is at 51 zColos spread across 30 markets in North America and Europe.

Speaking about the selection to serve the SaaS company, Bruce Garrison, senior vice president of Zayo’s zColo business segment said that, “This expansion is a testament to the customer’s impressive growth and success.” He further added that “Our ability to scale to meet their continued demand, coupled with our high-quality data center footprint, is well aligned with the needs of this important customer.”

Connectivity Contract

Earlier this month Zayo was selected by a global professional Service Company to provide connectivity between its multiple locations across Canada. Under the terms of the deal, Zayo’s solution is expected to securely transmit sensitive company’s data between its multiple corporate locations quick.

Zayo Group Considering Spinning off operations to create two stand-alone Companies

Evidenced by its numerous dealings, managing Zayo’s diversified operations has been an uphill task for the company’s board. Recently the Group’s board proposed spinning off the company into two publicly traded companies.

The two entities will include the infrastructure wing of Zayo that deals with the company’s initial offerings- fiber solutions, Wavelength and IP transit business. The other wing will deal with enterprise operations.

Through the spin-off, management will be easier as each company will be running autonomously while the company’s stakeholders will get an opportunity to invest in a company with proven performance records, both the infrastructure and enterprise wings of the company have been raking in good revenue in the last quarters.

The spinoff has, however, been interpreted by other quarters as a way to position the separate entities for a takeover.

Zayo has posted relatively good third quarter with analysts projecting a 17% annual growth in the next three years with doubled earnings per share.

Zayo’s stock looking good

Analysts covering the stock have given it a favorable rating of 1.9 with a Strong Buy Recommendation (almost a buy). As of this writing, the shares closed at $22.84 up 1.78% on a volume of 4.9 million shares. The stock is off its 52-week low but still below its 50-Days and 200-Days moving an average of $26.01 and $33.25 respectively.

Source: Stockcharts

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