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Equinix Buys Verizon Data Centers

December 07, 2016

Many of the telcos charged into the data center space in recent years to compete with AWS are now retreating.

AT&T last year sold some of its assets on this front to IBM. Just last month CenturyLink, which dropped $2.5 billion on Savvis a few years ago, announced it would be selling its data center and colocation business to a group of funds for $2 billion. And Verizon, which invested in $1.4 billion Terremark in 2011, this week announced plans to sell its data centers to Equinix for $3.6 billion; that deal is expected to close by the middle of next year.

The telcos have indicated they will instead use their resources to focus on offering services that complement, rather than compete with, AWS. That should give Verizon more time to focus on its wireless business, which Sprint and T-Mobile have been challenging with significant discounts. It will also enable Verizon to focus on its more recent acquisitions, including its purchase of Yahoo for $4.83 billion and its recent $4.4 billion deal to grab AOL, which the company is expected to leverage to get into digital advertising.

                    Image via Pixabay

As for Equinix, the deal with Verizon provides it with 29 new data centers serving 900 customers. That will bring Equinix’s data center assets to 175 in 43 markets. Those new data centers are in such U.S. metropolitan areas as Atlanta, Boston, Chicago, Dallas, Denver, Houston, Los Angeles, Miami, New York, Seattle, Silicon Valley, and Washington, D.C., and in Latin America in Bogota, Colombia, and Sao Paolo, Brazil.

"This unique opportunity complements and extends Equinix's strategy to expand our global platform,” said Equinix President and CEO Steve Smith. “It enables us to enhance cloud and network density to continue to attract enterprises, while expanding our presence in the Americas. The new assets will bring hundreds of new customers to Platform Equinix while establishing a presence in new markets and expanding our footprint in existing key metros. The deal will also provide significant value for shareholders as the proposed transaction is expected to be immediately accretive to our adjusted funds from operations per share upon close."

Equinix is already the leader in data centers, according to Current Analysis, and in retail and wholesale colocation, according to 451 Research.

Edited by Maurice Nagle

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