Larger telecom carriers have entered a data center divestiture stage, with Verizon as the latest example. Data center operator Equinix will buy 24 data center sites from Verizon for $3.6 billion in cash. The 24 sites consist of 29 data center buildings in 15 metro markets.
Equinix is a leading data center operator with a presence in 40 markets across 5 continents. With this Verizon sale, they gain data centers in key markets including: Houston; Atlanta; Miami; Washington DC; Bogota, Columbia; and Sao Paulo, Brazil, among others.
“This unique opportunity complements and extends Equinix’s strategy to expand our global platform,” said Steve Smith, president and CEO of Equinix in a press release. “It enables us to enhance cloud and network density to continue to attract enterprises, while expanding our presence in the Americas.”
Post-transaction, Equinix will add 2.4 million square feet of data center space, and will operate 175 data centers across 43 different markets. Equinix will gain 900 new customers and approximately 250 current Verizon employees will transition to Equinix. The sale adds 3 new metro areas for Equinix since they already operated in many of these Verizon data center markets.
Verizon Data Center Divestiture
Verizon is not selling their total data center portfolio and will retain “…its data center services delivered from 27 sites in Europe, Asia-Pacific and Canada,” according to a Verizon press release. Equinix executives, on a conference call discussing the deal, said 11 of the 29 data centers purchased are former Terramark data centers. Verizon acquired Terramark back in 2011 for $1.4 billion as a part of their push into the data center/IT business.
Verizon will also continue to sell managed hosting and cloud services, although there is no mention of any type of strategic partnership or resale arrangement between Verizon and Equinix, post-transaction, which is common in these types of deals.
Verizon says the sale aligns with their strategy to focus resources in areas that will help drive digital transformation for the enterprise. I read that to say, they gain cash that can help fund their wireless ambitions, which include buying additional spectrum and helping lay the foundation for their path to a 5G future. Fifth-generation wireless networks are very much about engaging enterprise and industry verticals for IoT, and represent a huge growth opportunity for carriers who can seize it.
Of course Verizon is not alone with this data center divestiture trend. CenturyLink just announced the sale of their data center portfolio last month for $2.15 billion. Windstream too sold their data center business for $575 million about a year ago.