Q9 opens Brampton data centre following $13M deal

Q9 Networks Wednesday said it has signed on a customer to anchor its Brampton, Ont., data centre which has remained dormant for more than two years.

In February 2002, Toronto-based Q9 purchased the Brampton facility from the insolvent Exodus Communications for an undisclosed amount. The facility has remained empty since then, but CEO Osama Arafat said that his company has taken some time for additional security features and maintenance work.

“The vast majority of it was ready to go. We had to, if you will, ‘Q9-ize it,'” he said.

Q9 has not revealed the identity of the customer that will be the first to occupy the space, but it will be sufficient to take over the majority of the 160,000 sq.-ft. centre, which will be operational in January 2005. Q9’s Toronto data centre, by comparison, is 20,000 sq.-ft.

“Our strategy was . . . we really wanted to find a large-anchor tenant which would get the facility to be break-even,” said Arafat. “It’s a very large facility, so we wanted it to be break-even in every short order. In the meantime, we’ve been marketing the facility. This was a fairly long sales cycle.”

Arafat said that the customer will use the facility primarily for co-location. The customer will pay Q9 a base fee of $13 million over five years, plus an additional, variable fee based on power and cooling usage. It’s an unusual arrangement for Q9 in that most of its customer deals are based on a fixed fee, with power and cooling included. Arafat would not speculate on how much additional revenue would be created by severing those features from the basic contract.

“People will know in due course,” he said. The Brampton centre is expected to turn cash flow positive during second quarter of fiscal 2005.

Q9 has a history of “focusing on their bottom line rather than trying to do things to impress the market,” said Mark Quigley, analyst at Ottawa-based Yankee Group in Canada. Purchasing the Exodus data centre “was certainly a big win for them, given the expense it saved them. It’s certainly good to see that they’re finally able to house something out there.”

After the customer moves in, there will be 700 cabinet equivalents left over which will be made available to other users. Arafat said that existing customers in Q9’s Toronto facility may be interested in an “in-province disaster recovery solution” using the Toronto and Brampton facilities.

Currently, Q9 customers that use two facilities for disaster recovery occupy the company’s data centres in Toronto and Calgary. Q9 introduced the redundancy service last year.

Arafat also said that companies outside the GTA may be more compelled to seek space and services from the Brampton facility due to its proximity.

Q9 recently added a floor to its Toronto facility because it was reaching maximum capacity. That expansion added about 300 cabinet equivalents to the existing 500.

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