Altus Sold GOCloud and Continued With Double-digit Growth

Altus Sold GOCloud and Continued With Double-digit Growth

Foto: Dražen Tomić

One of the strongest local data centers Altus IT, only a year after the acquisition GOCloud which deals among other with hosting services, decided to sell it to Avalon which core business is hosting, confirmed Altus CEO IT Goran Đoreski exclusively for ICTbusiness.biz.

According to him the reason for the sale is that the brand was positioned on the market a little bit different than the direction that he and others had set Altus IT. The highlights continue with the expansion and construction of a third data center and that this year is expected once again double-digit revenue growth toward 10 million HRK this year.

After a year, Altus decided to sell part of the business related to GOCloud. Why did you decide to do that, what is that about and who did you sell that part of the business to?

We decided to sell web hosting from the portfolio of GOCloud services. The reason we did this is that we do not see this activity as part of our core business.

Acquisition of GOCloud aimed at gaining knowledge that we needed to be able to deal with self-service cloud services. This helped us learn something about delivery automation process, maintenance and charging self-service cloud environments.

On the other hand, the brand was positioned on the market a bit different than the direction that Altus IT had set for itself. At the time of acquisition, GOCloud had a certain base of web users. Web hosting is completely outside of strategic goals for us, we do not have processes adapted to this type of user, nor do we want to establish them. Maintenance of that service means increased effort for us. We wanted and had to fully honor the commitment to the existing customers we assumed purchasing GOCloud.

The sale of web hosting portfolio is, therefore, a logical decision. With it, we want to focus, and improve service to customers. In this sense, we reached an agreement with Avalon web hosting, and they will soon take over the mentioned part of the business.

Services relating to automated delivery of virtual servers remain part of Altus IT, and we have no plans to change it soon. Moreover, it is very likely that the focus on this type of business in the foreseeable future will be even stronger.What does this mean for current users?

For users outside the portfolio that have been sold, this doesn't mean anything. For customers within the portfolio, I think this means improvement. In fact, our first goal in this transaction was to ensure continuity of quality for users. We've always talked only with the potential buyers who can certainly provide quality service after they take it over. Earnings from these transactions were never the main goal.Avalon is our long-time customer and partner, we know each other very well, together we went through good and difficult times. All the employees of both companies know each other, and the primary feeling that all of us have is that we are colleagues working on the same goal. For this reason, and because we know that Avalon's focus is precisely on the area of the Web we are talking about, we are confident that the service will be even better than before. They are primarily focused on web hosting.

With this, Altus is turning more strongly towards business users and complex services. What are the plans?

Although the share of collocation in the overall business declines, it still brings most revenue for our company. I believe this will stay the same in the segment in which we are suppliers to other suppliers of ICT services. That is, I believe that the collocation as a service will never completely disappear.

On the other hand, we can see that cloud and hybrid cloud slowly leave the buzzword zone and become a valid business option for most potential users. More and more we build business relationships with companies that are end-users of ICT services. They often have not seen the benefit of collocation, but cloud, with its characteristics of switching cost into operational and paying for exactly the resources that are used, is a very measurable reason for migration into a professional data center.

We also hope, and we wanted that before as well, that system integrators will begin to turn away from "box moving," focus on service, and use professional data centers as partners responsible for infrastructure. This is a natural and unstoppable way, the only question is who will and when find the strength to start it. The first ones to do so will probably be the most successful as well.

In addition to all this, a new data center is being built. How much was invested in it and what are the plans?

Like always, I will refrain from answering the question about the amount of investment. In fact, I do not think it's a big secret. When 2016 financial results get published, everyone will be able to take a look at our balance sheet in one of the specialized web services and get that information.

The reason I do not answer these questions is that so far the value of a project was assessed through the millions spent. And with this kind of investment, we know that millions are counted. Our activity is not construction, but a service. A best infrastructural service. Thus, it is best to look at what our revenue growth margins are. Everything else is confusing and wrong because the data center that has invested millions in something is not necessarily better because of it. We do not want to compete with the millions spent.

This is the reason I do not want to contribute to the wrong public perception of what is important in the work of data centers.

As far as plans are concerned, with this extension, we immediately increased data center whitespace from 400 to 630 square meters, with the potential of a simple expansion up to 1000. The location in Selska asserted itself, and there is a significant user interest in it, and it would be pointless to run away from the need for resources in that place. Especially as in the current 400 square meters we can place another 2 or 3 cabinets of equipment, but in fact, we are already in the red, as we already have contracted customers waiting for the construction to finish implementing the expansions they expect. That moment will be at the end of January.

We will not run away from expansions in other geographic locations either, we have the strength to implement that in parallel to the current construction of DC3, but we are very careful about that step. Mistakes in the assessment of such investments can be very expensive, so we do not rush it. The moment we are ready, we will probably start a second location.

Can you highlight some of the key users/industries that today use Altus data centers?

It's not that simple to speak about the names of users. The data center is like a bank, the data that we store are very valuable to our partners, and sometimes they would not be happy to be mentioned. With some users, we are obligated by confidentiality agreements.  What we can mention are the types of industries that use our services.

So far, we have been in the telecom field and other highly regulated industries, such as financial, pharmaceutical, betting, and so on. The recent trend is that our services are also used by the companies that do not have a legal obligation to be in professional data centers. We are talking about energy, logistics, food production, tourism and the like. I think this is a good trend because this expands the market for us, and at the same time those companies reduce their IT infrastructure costs and raise its quality. In this case, because of economies of size and focus on service, it is a "win-win" for both users and suppliers.

You expand cooperation with telecoms to provide customers with a very high level of service. What are the things that happened this year?

This year has been interesting on this point. Let's go in the order the things happened. Beginning of this year, Microsoft Express Route Point of Presence came into production. It is the only infrastructural presence of Microsoft in the region. It is essential for all users who have a need for the professional level of integration with Microsoft Office 365 and Azure environments. Simply put, it makes a connection to these services more stable and better than through the Internet. I believe that the time of the hybrid cloud and distributed service delivery is just starting, and in this way, we position ourselves as a future focal point for connection to other cloud providers, just as now we are the focal point of exchange of telecom capacities.

The next event was the establishment of CIX2 hub, in collaboration with SRCE. In each country, Internet Exchange provides local exchange Internet traffic. The existence of such other connection point in a country increases the resilience of the infrastructure itself to various disruptions in communication but also allows users already present in Altus to avoid the cost of communication transport to the primary CIX site and to connect to the service in Altus.

The most recent event is the establishment of a point of presence of yet another (fifth for us) Tier 1 telecom in Altus. This is TeliaSonera Carrier, ICT business portal reported recently about. Their arrival is not important only for our company but also for the entire market. I use this opportunity to say that if any of the readers have a need to inquire about their services, they can contact us and we'll facilitate the contact to the TeliaSonera sales staff.

In addition to these major events, the telecommunications field has also a series of small achievements, but I think what I already said is enough to illustrate the course of the previous year.

How do you evaluate this business year - results - income, the number of users?

I'm lucky, now for the fifth time in this position, to answer this question. But, this time again the answer will not be spectacularly different to any so far. This year will end with our standard double-digit growth, to the total of somewhere close to ten million HRK revenue. As for profits, the majority of the investment in DC3 will be amortized over the years, so that it will affect the margin with its lesser part.

It is important to emphasize that we continue with a steady and stable growth, and that we do not in any way intend to endanger our credit rating, which is level A. The financial stability of our customers is just as important as the stability of the electricity supply or the stability of communications. Therefore, there is no compromise with it, as well as with ten-year stability of electricity supply.

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