View all newsletters
Receive our newsletter - data, insights and analysis delivered to you
  1. Technology
  2. Cloud
October 7, 2016

Report says Verizon is to sell its data centres to Equinix for $3.5bn

Equinix is believed to be the most suited acquirer.

By Hannah Williams

According to a financial analyst’s report, Verizon communications is expected to be drawing closer to selling its data centres to Equinix for around $3.5 billion.

Colby Synesael, a Cowen & Co LLC analyst said in a research report: “We believe a transaction involving Verizon’s co-location assets is imminent and that Equinix is the most likely acquirer.”

Out of the 14 data centres Cowen & Co. believes may be in line to sell, the 750,000-square foot NAP of the Americas in Miami is the crown jewel.

The analyst estimates that this facility alone is responsible for about $100 million of the $250 million to $275 million in revenue they believe the portfolio generates for Verizon.

Verizon has declined to comment, instead saying that the company will provide an update on its sale process when it reports third quarter earnings.

equinixThe possible sale comes as a shift for the company, as Verizon acquired the cloud service firm Terremark in 2011 for $1.4 billion.

As it now focuses on its wireless business and digital media, Verizon has started to sell off its noncore assets over the past year, which includes residential phone lines.

Content from our partners
Green for go: Transforming trade in the UK
Manufacturers are switching to personalised customer experience amid fierce competition
How many ends in end-to-end service orchestration?

Part of its move to digital media sees the recent agreement for Verizon to buy Yahoo for $4.8 billion in July.

Colby Synesael said: “Revenue at the unit has been declining based on what we believe has been a lack of focus by Verizon which is why Verizon has elected to sell them to begin with.

“In the hands of Equinix we believe it is highly likely the company can right the ship although this could take upwards of 1-2 years post close.”

Some of Equinix’s customers include Amazon Web Services and Microsoft.

Synesael added: “We estimate EQIX 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.”

 

Topics in this article : , ,
Websites in our network
Select and enter your corporate email address Tech Monitor's research, insight and analysis examines the frontiers of digital transformation to help tech leaders navigate the future. Our Changelog newsletter delivers our best work to your inbox every week.
  • CIO
  • CTO
  • CISO
  • CSO
  • CFO
  • CDO
  • CEO
  • Architect Founder
  • MD
  • Director
  • Manager
  • Other
Visit our privacy policy for more information about our services, how New Statesman Media Group may use, process and share your personal data, including information on your rights in respect of your personal data and how you can unsubscribe from future marketing communications. Our services are intended for corporate subscribers and you warrant that the email address submitted is your corporate email address.
THANK YOU