451 Research

February 12, 2013 Claranet Limited

Claranet are the focus of a recent report from technology analyst 451 Research, evaluating the managed service provider’s eventful 2012 and assessing its prospects in 2013. Inevitably it highlights Claranet’s £60m worth of acquisitions in 2012: in July, Portuguese service provider Cgest, UK based MSP Star Technology Services - the largest acquisition - in November and finally French web and open source hosting services company Typhon in December.

The report explains that Claranet now boasts a combined total of 4,700 customers, 19 datacentres (in six European markets), and annual revenues of over £120m, which ensures Claranet ‘has leapfrogged many of its nearest rivals, earning a place in the top ranks of the European hosting business.’ The report's author, Rory Duncan, writes that aside from increases in revenue, customer base and datacentres, these acquisitions also give Claranet additional technological capabilities.

Accordingly, at Cloud Expo Europe 2013 in late January, Claranet UK demonstrated its expanded portfolio for the first time, showcasing Star’s unified communications and hosted desktop services alongside its award-winning Virtual Data Centre service. Duncan explains the Star acquisition allows the company a greater degree of market penetration due to the new technological expertise and portfolio the UK operation inherits. With the acquisition of Star the Claranet Group's revenue split has also changed. Formerly constituting a third of Claranet’s total revenue, the UK now represents a full half. In the UK space the report identifies Amazon and Rackspace as competitors, as well as Colt, Attenda, NTT Europe amongst others.

Looking to Claranet’s future plans, the report underlines Claranet UK's intent to further integrate Star’s services with the top end of its stack, while also ‘extending the market penetration facilitated by its current portfolio.'

One of the central tenets of Claranet’s strategy, an emphasis on local service provision, is also highlighted in the report, with the acquisitions of Cgest and Typhon interpreted as valuable assets which ‘round out the local data centre, networking and web hosting offerings from Claranet in Iberia and France.’

Duncan suggests that Claranet view the DACH region (German speaking countries) as an important source of future revenues, either through organic growth or M&A activity. The report also asserts that Claranet should pay careful attention to organisations already holding a strong foothold in that market. Italy is also mooted as a potentially interesting market in which Claranet does not currently have operations.

The report concludes that Claranet is in a healthy position at the start of 2013 and that the company's approach to growing the business ‘via higher-value offerings further up the stack, while taking increased share of local markets via selected regional acquisitions’ is strategically sound.

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