UPDATE 1-Telecity reassures market with robust growth outlook

Wed Feb 13, 2013 7:13am EST

* 2012 core earnings up 22 pct, in line with market view

* Says confident on 2013 growth

* Shares up 6.6 pct

By Paul Sandle

LONDON, Feb 12 (Reuters) - Data centre operator Telecity posted a 22 percent rise in full-year earnings on Wednesday, meeting analyst expectations, and gave a confident outlook for 2013 underlined by robust demand.

The British company bases its facilities in European cities like London, Amsterdam and Paris, where multiple Internet connections provide near failsafe services to retailers, banks, social media sites and video-on-demand providers.

Chief Executive Michael Tobin said the group was continuing to build new capacity, which rose to 86 megawatts from 68 last year.

Demand was driven by growth in online activity, both at home and on mobile devices, he said.

"You probably watch TV over the Internet, do some online banking, do your Sainsbury's shop, download a movie or make an Amazon purchase," he said. "All of these things are driving growth."

Telecity, which competes with Equinix and Interxion, triggered some concerns among investors last year about whether a slowdown in new capacity might be a sign of cooling demand.

Tobin said on Wednesday that there had been delays in opening new capacity in London and Amsterdam, but that these were caused by difficulties in obtaining planning permission and power supplies rather than demand weakness.

"Some analysts misinterpreted the slowdown of capacity growth as a slowdown as demand," he said. "(But) not withstanding all of those of challenges, we ended the year with the largest expansion of capacity in our history."

Analysts at Berenberg said guidance from management that it should be able to grow earnings in line with forecasts of about 20 percent for 2013 would reassure the market.

Milan Radia at Jefferies, meanwhile, who has a "buy" rating on the stock, said it was a solid set of results.

"Recent speculation regarding downgrades and capacity delays is evidently misplaced, creating a compelling buying opportunity," he said.

Telecity's adjusted core earnings rose 22 percent to 129.5 million pounds ($202 million) in the year to end-Dec.

Shares in the group, which fell to a 16-month low of 765 pence in November, were 6 percent higher at 877 pence at 1208 GMT.