US telco giant Verizon is reported to be closing in on a deal to sell data centers to Equinix for about $3.5 billion.
The operator has been linked with a significant sale of data center assets since June this year, when it was said to be looking for about $2.5 billion for a total of 48 data centers. (See Verizon Seeks $2.5B From Data Center Sale – Report.)
According to the latest report, from Investor's Business Daily (IBD), Verizon Communications Inc. (NYSE: VZ) is on the verge of striking a deal with data center operator Equinix Inc. (Nasdaq: EQIX) for a total of 14 facilities, mainly comprising assets it picked up with its acquisition of Terremark back in 2011.
IBD cites a research report from Cowen and Co. analyst Colby Synesael as the source of its story. "We estimate Equinix could pay 13 to 13.5 times EBITDA, or $3.5 billion, and believe such a transaction would be viewed as positive for Equinix and neutral to Verizon," Synesael is quoted as saying.
Verizon has looked keen on reducing its asset base so that it can focus resources on core services activities and has already sold parts of its fixed-line business and some mobile towers.
At the same time, the operator has agreed to spend $4.5 billion to acquire the core assets of ailing Internet company Yahoo Inc. (Nasdaq: YHOO) -- a deal that could be threatened by recent revelations that Yahoo suffered a major security breach in 2014 and may also have colluded with US intelligence agencies to spy on user emails.
Last year, Verizon spent $4.4 billion on a takeover of AOL Inc. (NYSE: AOL) aimed at bolstering its mobile video and advertising capabilities.
Heavy Reading analysts have previously commented that telcos will in future need much smaller and more distributed facilities, taking advantage of their network footprint, to support cloud service offerings underpinned by SDN and NFV technology.
— Iain Morris, , News Editor, Light Reading