Summary: Chinese data centre operator 21Vianet formed a joint venture with Unisplendour Corp (UNIS) to provide Microsoft Azure and Office 365 cloud-based services tailored for the Chinese market.
Details: Based in Xiamen, Unisplendour-Vianet is 51%-owned by UNIS and 49% by 21Vianet. The two partners had signed an agreement with Microsoft last September, covering the provision of customised hybrid cloud and related services in China. UNIS is a publicly listed company that is owned by Tsinghua Holdings (THHC), itself a state-owned corporation funded by Tsinghua University. Unisplendour’s core business is IT services. It also provides IT hardware and software and its stated goal is to expand its cloud business, both domestically and internationally. Earlier this month, an affiliate of Tus-Holdings, which is also backed by Tsinghua University, invested $388m for a 21.4% equity stake in 21Vianet, representing 51% of the voting power.
Angle: 21Vianet has been struggling, with 1Q16 results showing slowing colocation revenue growth and significant declines in managed network services growth, likely due to a combination of slowing demand in the Chinese data centre market and increased competition. Azure and Office 365 were the primary drivers of 10-15% q/q cloud revenue growth. Management made no mention of IBM Cloud services. As global cloud providers report strong double digit revenue growth, 10-15% q/q growth in a relatively undeveloped market seems light. It is telling that 21Vianet is the minority partner in the venture, and for 21Vianet’s sake it must be hoped that the JV can propel far greater uptake of cloud services, and that its 49% share will be more than it could achieve on its own.