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10/28/2013
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NTT Invests $875M In U.S. Colocation, Cloud Companies

Japanese telecom giant will pay $525 million for Virtela enterprise communications and $350 million for an 80% stake in RagingWire data centers.

NTT Communications, the communications unit of Japanese telecom giant Nippon Telephone & Telegraph, is spending $875 million to acquire control of two U.S. companies and expand its cloud footprint both here and around the world.

It will pay $525 million to wholly acquire Virtela Technology Services, a Denver, Colo., enterprise communications firm, and $350 million for an 80% stake in California-based RagingWire Data Centers, which operates modern data center facilities on both the East and West Coasts.

NTT Com said the company plans to do $1.95 billion in cloud services by March 2016, or double its total for 2012. It's seeking to expand colocation and cloud services revenue, as revenue from its voice services declines, according to Reuters. NTT Com owns data centers in the U.K. and Hong Kong. RagingWire will add data centers in Ashburn, Va., the same city where Amazon's U.S. East-1 complex is located, and Sacramento, Calif.

The investments in Virtela and RagingWire represent NTT's determination to get a share of the world's cloud market. NTT's announcement said: "This deal expands NTT Com's global presence from 160 to more than 190 countries/regions. Combined services will be introduced to customers starting in 2014." The statement references 190 countries because Virtela has that large of a global presence.

[ Telecom companies see gold mines in cloud services. See Verizon Pushes Into Google, Amazon, Microsoft IaaS Territory. ]

Both companies are young, growing participants in the cloud computing services market. Virtela bills itself as "the world's largest independent managed network, security and cloud services company." The keyword in that statement is "independent." Verizon Terremark, CenturyLink Savvis, Google Compute Engine, Amazon Web Services and IBM's SoftLayer unit could all rightfully claim they are in a stronger position to claim that mantle.

Nevertheless, Virtela has established itself as a manager of enterprise communications around the world. It often works through local telecommunications partnerships, and those relationships will help put NTT into multiple markets without needing to license cables and lines.

RagingWire runs a data center complex in Sacramento, outside the seismic activity zone of the Silicon Valley. It boasts being close enough to Silicon Valley to be useful, but far enough to be safe from earthquakes. The Sacramento complex consists of 500,000 square feet of data center space able to supply up to 225 watts per square foot, a capability that allows dense server racks.

Its newest data center, in Ashburn, has a highly redundant infrastructure capable of offering a 100% uptime service level agreement. Ashburn is a well-known Eastern communications hub, and RagingWire says it offers many carriers and communications options from its 150,000 square foot facility there.

NTT Com plans to expand its U.S. cloud services presence by making a combination of Virtela and RagingWire services available early next year.

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