In light of the decision to focus on their core business, Verizon Communications Inc.—the largest United States wireless carrier—is seeking buyers for its enterprise assets. According to experts, the estimated worth of these assets is $10 billion. The sale would comprise businesses that have been off the pace with advances in cloud computing, including MCI and Terremark, who have been facing cutthroat price competition from top-notch players such as Alphabet Inc. and Amazon.com Inc. MCI provides landline and Internet services for large business customers, while Terremark is the company’s data center unit.
As these assets have been a part of the corporation for a long time now, they cannot be easily detached. Any potential buyers will most likely have to sign commercial agreements with the company. Verizon Communications Inc. is considering a few proposals for organizing these asset sales in the best possible way, but no deals are in the pipeline right now. Earlier this year, the wire line provider CenturyLink Inc. was in talks with Verizon to buy some of the assets. Unfortunately, the deal could not materialize due to disagreements on certain terms. However, CenturyLink announced this week that it is exploring options for some of its data centers, including selling said data centers, which marks a major strategy shift on CenturyLink’s part.
Sources say Verizon Communications Inc. is contemplating the sale of assets based on the advice of Citigroup Inc. These assets have projected annual earnings of around $2 billion before any interest, depreciation, taxes, and remuneration. Citigroup Inc., Verizon, and CenturyLink refused to comment on the news, and the sources did not want to reveal themselves, considering the confidentiality of the matter. Clearly, the enterprise telecommunications industry has had to adapt to corporate customers in recent years to manage their data, no matter how sophisticated and cheaper the options maybe.
Likewise, AT&T Inc. has been seeking buyers for its data center assets for some time now, while Windstream Holdings Inc. sold its data center business to TierPoint for $575 million last month. During Verizon’s third-quarter earnings call on Oct. 20, Fran Shammo—the Chief Financial Officer of Verizon Communications Inc.—stated that despite secular and economic challenges with its global enterprise division, the company continues to succeed. This division faced a 4.9 percent decline in revenue in the quarter ending on Sept. 30.
In 2006, Verizon completed an$8.4 billion acquisition of MCI, followed by an aggressive bidding war with Qwest Communications, which is now a part of CenturyLink. In 2011, Qwest Communications acquired Terremark Worldwide Inc. for $1.4 billion.
Verizon has been eager to sell other non-core assets as well. In February, it announced the sale of residential landline assets to Frontier Communications for $10.54 billion, which was followed by the unloading of its tower portfolio for more than $5 billion. Seems like Verizon Communications Inc. is switching lanes in order to keep pace with the fierce competition in the telecommunications market.