Building Datacentres in Russia for Multinational Clients

Building Datacentres in Russia for Multinational Clients Mike Segal Commercial Director IXcellerate Limited 29 October 2013

Agenda Opportunity: Datacentre Business Models Market Overview: The Russian Datacentre Market Check-list: Case Study of IXcellerate s Adventure Risks: Common Issues with New Datacentres in Moscow Reflection: What does the future for datacentres in Moscow and Russia hold?

Opportunity: Datacentre Business Model Business Models for Datacentres Examples of Successful Datacentres What Breeds Success

Types of Datacentres Highly Connected Datacentres - Very High Margins, coveted assets - Examples: Telecity, Telehouse Enterprise Datacentres - Middle/High Margins in large cities - Examples: Equinix, Savvis, Interxion Wholesale Datacentres - Low Margins, big requirements - Examples: DRT, Global Switch Integrator Datacentres - Middle margin, selling many services - Examples: T-Systems, IBM

The Airport Metaphor

Success Stories 14 datacentres in France, UK, Switzerland and Germany Pure play, Carrier- neutral Sold to Equinix for $555m 3 datacentres in South Africa Operate NAP Africa peering planorm Pure play, carrier- neutral Largest global datacentre provider 98 datacentres in 12 countries Pure play, carrier- neutral

Recurring Theme Pure Play No cannibalizaoon of clients Carrier Neutral ConnecOvity drives datacentre success Mul3- Site Customers can grow with you Opera3onal Exper3se Trust partnership between customers and datacentres

Market Overview: The Russian Datacentre Market Moscow vs. Other Major European Cities Available Space in Moscow Growth Potential for Moscow Datacentre Market

Colocation Availability in Major European Markets Source: CBRE 2013

Colocation Availability in Moscow 8000 90% 7000 6000 5000 4000 3000 2000 1000 80% 70% 60% 50% 40% 30% 20% 10% Total Square Metres Percentage Available 0 Dataline Linx Dataspace Stack IXcellerate Croc Others 0% Source: IKS Consulting 2013

Moscow vs. Rest of Europe London = 280,000sqm 50,000sqm Available Frankfurt = 160,000sqm 24,000sqm Available Paris = 110,000sqm 12,200sqm Available Amsterdam = 100,000sqm 18,000sqm Available Moscow = 26,000sqm Tier 3 Space Available = 1,100sqm

Growth Potential?

Growth Potential?

Russia By The Numbers Internet Penetration Rate in Russia 1995-2045 Source: Russian Academy of Sciences 20,630,858: Fixed line internet users 7: Global ranking of total internet users 14.5%: Percentage of populaoon with internet subscripoon 75,344,817: Mobile SubscripOons 5: Global ranking of mobile subscripoons 52.9%: Percentage of populaoon with mobile subscripoon THE FUTURE HOLDS GROWTH!

Check List: Opening a Datacentre in Moscow for Multinational Customers Case Study: IXcellerate Limited

Step 1: Management Team Find local management team Datacentre experience Local management knowledge Establish Russian en3ty Type of enoty General Director?

Step 2: Find a Site Locate a site for the datacentre Brownfield vs. greenfield Due diligence on ownership PotenOal power growth Neighbours Security Durable building ConnecOvity IXcellerate Moscow One

Step 3: Secure Finance Long process to find investors Understand the business Long- term investment Where to invest? UK, Cyrpus, Russia, etc. Example of IFC: Project disclosed: December 2011 Approved: May 2012 Invested: June 2012

Step 4: Construction Fit- out vs. new build Design and implementa3on Impor3ng equipment MNCs like brand names General contractor MNCs want European style datacentres IXcellerate example: ConstrucOon began: July 17, 2012 ConstrucOon complete: December 27, 2012 IXcellerate is building over 3 phases on one building Approvals process from Rostechnadzor

Step 5: Operations Hiring key staff Sales, OperaOons, Technical, AccounOng, etc. Establishing opera3onal procedures (ISO9001) Tes3ng BMS and equipment Failures can happen with new equipment Crea3ng customer management interface General maintenance procedures Daily, weekly, monthly, quarterly

Step 6: Sales, Sales Sales Local and interna3onal staff to manage sales Market presence Building a brand Answering RFPs and RFQs Contracts and SLAs Implementa3on of client solu3on ColocaOon vs. cage Ordering equipment for customers

Check-List Find the Best Management Team Setup Local En3ty Find the Best Loca3on for the Datacentre Raise Financing Design and Construc3on Receive Approvals Begin Opera3ons Sell- out and con3nue to build more!

Risks: Common Mistakes Picking the wrong loca3on Not raising enough financing Delays during construc3on Equipment failures due to poor commissioning Not receiving Rostechnadzor approval Not focusing on sales from the beginning Long sales cycle, need clients before complete Lack of connec3vity Excellent customer service (Responsiveness)

Reflection: The Future for Datacentres in Moscow and the Russian Federation

Reflection Growing demand for Tier 3+ datacentre space in Moscow and other Russian cioes Lack of supply of Tier 3 and Tier 2 datacentre space in Moscow Growing number of internet users and mobile users in Russia MNCs now thinking of outsourcing IT in Russia Customers have high expectaoons but are price sensiove

Lack of Supply + Increasing Demand = Great OpportuniOes in Moscow and the Russian FederaOon

How can IXcellerate help? Any Questions? Thank you! IXcellerate.com