Alpheus acquires StratITsphere's colocation unit, broadens enterprise customer base

Alpheus Communications has hatched a deal to acquire StratITsphere's retail colocation business unit, a move that will broaden its enterprise customer base and add data center capacity to respond to opportunities in Houston's rapidly growing Energy Corridor.

In addition to the acquisition, the two companies have formed a strategic partnership that includes a long-term lease of data center space at 1510 Primewest Parkway, Katy, Texas, which is part of Houston's Energy Corridor.

By making this acquisition, Alpheus immediately adds more than 12,000 square feet of data space in the Houston market. Meanwhile, StratITsphere will continue to operate its 93,000-square-foot data center with a focus on wholesale customers.

The new data center space offers a number of benefits to local businesses.

For one, the space is located within 30 miles of downtown Houston. Because it is strategically positioned outside Houston's 500-year floodplain, is not in any commercial flight paths, and is beyond a 20-mile radius of any chemical or flammable plants, it is also an ideal disaster recovery site.

"We were out of data space in Houston and we needed to solve for that," said Scott Widham, CEO of Alpheus Communications, in an interview with FierceTelecom. "Building a data center is an extremely very expensive proposition: it's about $1,000 per square foot to build."

Making deal with StratITsphere made sense for both companies. Alpheus already has connected its fiber facilities inside the data center provider's facilities in Houston.

StratITsphere itself have been trying to monetize that asset for years but could not get the right price.

"We came up with a new construct where we pay them a pretty good amount and acquired for 20 years 2 halls and then all of their customers in those pods have become Alpheus customers and the associated revenue and EBITDA," Widham said. "Then we contract with StratITsphere to do the electric and the mechanicals or basically everything it takes to run a data center."

Widham added that "depending on where we are, we may expand into the additional halls over time."

But this is not just about gaining more data center space. Similar to other markets where it provides service, Alpheus will couple the data center offering with other services like Ethernet or managed IP/MPLS services.

"What we will do is find a regional bank that has six to eight locations and sell them network and managed services like an MPLS network, VoIP and DIA and if they're interested in a cabinet, bundle that in for one price," Widham said. "That's been going really well."

Unlike other competitive providers, Alpheus can better control the customer experience since the new data center is connected to Alpheus' growing metro fiber footprint that it has established in a number of key Texas markets, including Austin, Corpus Christi, Dallas, Ft. Worth, Houston and San Antonio. 

At the end of June, the company said it would spend up to $12 million to increase its fiber network footprint in Houston and Dallas, a move that will enable it to better respond to multi-site businesses that are looking for alternative sources to connect their office locations and data centers.

For more:
- see the release

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Updated article on Aug. 14 with quotes from Scott Widham, CEO of Alpheus.