Report: Verizon Kicks Off Auction Process for 48 Data Centers

Verizon Communications has kicked off the process to auction 48 data centers as it looks to sharpen focus on its core business, hoping to make more than $2.5 billion from sale of the assets, which include the data center portfolio it gained through its $1.4 billion acquisition of data center provider Terremark Worldwide in 2011, Reuters reported, citing anonymous sources familiar with the matter.

A report that the company was considering selling many of its data centers surfaced earlier and also relied on anonymous sources. Verizon CFO Fran Shammo sought to discredit it as speculation. The new report, however, says the company has in fact already initiated the auction process and selected Citigroup as an advisor.

Verizon is one of several telecoms looking for alternatives to owning massive data center portfolios they built out over the past several years in the hopes of taking advantage of a growing enterprise IT outsourcing market by providing colocation, managed services, and cloud infrastructure services.

It has proven to be a tough market for them to compete in, however. CentryLink, which last year said publicly it was looking to get out of owning its massive data center portfolio, has struggled to reverse a trend of falling revenue from its data center services business. Verizon’s wireline business segment, which includes its data center services, has been reporting declining revenues as well.

Verizon’s 48-data center colocation portfolio generates about $275 million a year in earnings, sources told Reuters. Equinix, the world’s largest colocation provider, reported $1.1 billion in earnings for 2014.

AT&T is another major telco that’s been looking for ways to offload its data center portfolio. A report came out early last year that the company had $2 billion worth of data center assets up for sale. In December, the company announced that IBM had taken over at least part of that portfolio, acquiring AT&T’s managed hosting business, including equipment and access to data centers that hosted it.

Windstream, a smaller telecom, sold its data center business to data center provider TierPoint last October.