Less than two months after announcing the sale of its data centers in a $3.6 billion deal with Equinix, Verizon is on the verge of divesting itself of its broader enterprise cloud services business, Light Reading believes.
While there is no official confirmation – Verizon declined to comment -- a trusted source with knowledge of the deal tells Light Reading that a sale has been agreed and a public announcement is expected to be made during February or March. The identity of the buyer is being kept a close secret.
Rumors that Verizon Communications Inc. (NYSE: VZ) would sell off its enterprise business first started to emerge in 2015, a mere four years after the telecom operator bought cloud services company Terremark. Despite the competitive advantage that deal was supposed to deliver, Verizon showed early signs of struggling to build on Terremark's success. The telco lost out in the race for market share in public cloud services to Amazon.com Inc. (Nasdaq: AMZN), Google (Nasdaq: GOOG) and Microsoft Corp. (Nasdaq: MSFT), and while that acknowledgement could have and perhaps should have helped Verizon to double down in the enterprise sector, momentum never seemed to build.
Fellow carriers AT&T Inc. (NYSE: T), CenturyLink Inc. (NYSE: CTL) and Windstream Communications Inc. (Nasdaq: WIN), meanwhile, all continue to sell enterprise services. However, Windstream has sold off its physical data centers, and CenturyLink is in the process of doing the same. The focus for all three operators is shifting toward virtualization and away from physical assets. (See CenturyLink Sells Data Centers for $2.15B and Finally! Equinix Pays $3.6B for Verizon Data Centers.)
Verizon could have followed a similar path, but unlike the other large US carriers, Verizon never used its cloud capabilities to remake its own internal network. That has left Verizon's cloud business in more of an isolated position, and it makes the division more of an appealing target for sell-off.
Verizon has also prioritized spending elsewhere, notably with the $4.4 billion acquisition of AOL in 2015, and the pending $4.8 billion acquisition of Yahoo Inc. (Nasdaq: YHOO). The service provider believes its future growth will come from content and applications that run on top of its network, as well as from the development of 5G wireless technologies. (See Yahoo Signing Off in $4.83B Sale to Verizon and Verizon's $4.4B AOL Buy a Digital Media Play.)
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— Ray Le Maistre, , Editor-in-Chief, Light Reading