Verizon to Sell Cloud and Managed Hosting Business to IBM

Verizon Communications has agreed to sell its cloud and managed hosting business to IBM, announcing the deal the same week it completed the $3.6 billion sale of a massive data center portfolio to Equinix.

The telco began pulling back from being a cloud service provider last year, when it shut down its public cloud but held on to its virtual private cloud business. Verizon and other telcos (such as CenturyLink and AT&T) have been divesting costly infrastructure assets that support their enterprise IT services, switching to less capital-intensive models for some services and pulling out completely from others, namely public cloud.

Besides its bread-and-butter network services, Verizon’s enterprise division will now focus on managed services around partner offerings. “Our goal is to become one of the world’s leading managed services providers enabled by an ecosystem of best-in-class technology solutions from Verizon and a network of other leading providers,” George Fischer, senior VP and group president of Verizon Enterprise Solutions, said in a statement.

He also mentioned an agreement with IBM “on a number of strategic initiatives involving networking and cloud services” but did not elaborate. Terms of the transaction were not disclosed.

The company’s enterprise solutions revenue declined 4.3 percent in the first quarter. Company-wide first-quarter revenue was $29.8 billion, down 7.3 percent year over year.

Verizon saw a steep drop in wireless subscribers in the first quarter, losing more than 300,000 customers. According to analysts, its biggest business would have lost even more customers had it not introduced unlimited data plans halfway through the quarter.

This is not the first major telco to sell IBM its managed hosting business. In 2015, the company took over the managed hosting business of AT&T, acquiring equipment and control of the data centers that supported it.

While its public cloud business lags far behind Amazon Web Services and Microsoft Azure, IBM is currently leading in hosted private cloud.