Going once, going twice: Verizon data centers up for auction

Jan. 6, 2016
Reuters reports the carrier is seeking $2.5 billion or more for 48 data centers.

A Reuters report published January 5 says Verizon Communications has begun a confidential auction to sell 48 data centers and is hoping to bring in more than $2.5 billion for the properties. “The … portfolio up for sale … generates annual earnings before interest, tax, depreciation and amortization of around $275 million,” Reuters said, citing an unnamed person.

Reuters said its “sources asked not to be identified because the auction is confidential.” The news organization also said “Citigroup Inc. is advising Verizon on the possible sale of its data centers … Verizon and Citigroup declined to comment.”

As we reported in December, the attempted sale of data center assets by carriers including Verizon, AT&T and CenturyLink represent decisions by the companies to get out of the real estate business and focus on IT-service delivery.

IHS analyst Liz Cruz commented in December that carriers’ owning data center real estate is “a business model that is no longer working for them,” adding that the sales of these assets really is about the carriers not wanting to invest more capital in what isn’t working.

“Perhaps it’s simply because the telcos—who are looking to unload the wave of data centers purchased a few years ago—are realizing that their specialization could lie solely in the IT services provided and not in the maintenance, upkeep, and management of huge real estate assets. It’s already quite common for retail colocation suppliers to lease data centers from wholesale data center providers like Digital Realty, Infomart, and Global Switch. Equinix, the revenue share leader in the multi-tenant data center market, owns just 23 of their 105 data centers.”

You can read the Reuters report here.

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