Tuesday, January 5, 2016

Verizon Wants to Sell Data Center Business

Verizon Communications is moving to sell its data center assets, reversing an earlier effort to  expand in hosting and colocation services after it acquired data center operator Terremark Worldwide Inc in 2011 for $1.4 billion.

The assets up for sale includes 48 data centers, generating annual earnings before interest, tax, depreciation and amortization of around $275 million.

The move comes at a time when a few U.S. tier one telcos appear to be rethnking their roles in the data center business.

In addition to the possible sale of Verizon data center assets, AT&T and CenturyLink likewise are trying to sell their data center businesses.

Windstream already has divested its data center business.  

So what is going on? Most larger U.S. telcos seem to believe they can obtain the benefits (services for their enterprise customers) without owning the facilities, and can deploy capital elsewhere.

Cincinnati Bell also is monetizing its data center assets, selling ownership shares of its CyrusOne data center business and raising cash to reduce debt.

Some would argue the large telcos also face issues of relevance in the cloud computing  business.

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