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February 2, 2018updated 12 Jul 2022 9:14am

AT&T mulls sale of $135m-a-year data centres

Selling its data centre arm would release capital for AT&T's potential purchase of Time Warner Inc.

By Sabrina Dougall

AT&T is talking to Bank of America Corp about a potential sale of its data centre business.

The US communications heavyweight is mulling over the divestiture of its $135m-a-year-income data centre assets, several sources told the Wall Street Journal.

A similar move had been considered in recent times, with insiders reporting AT&T had engaged Citigroup to think through selling its data centre and managed hosting segments. However, the network megalith only of divested its hosting arm, selling to IBM in 2015.

Through the hypothetical sale, AT&T could regain capital to reinvest in its network and video segments. A deal could well be worth billions, considering Verizon sold its data centres to Equinix for $3.6bn in 2017. Of course, nothing is yet set in stone and a deal may not arise as a result of discussions, WSJ reported.

Data centres potentially up for sale would require investment and it is too soon to tell how much market interest there would be, sources familiar with the company told the WSJ.

The teleco giant tried to purchase Timer Warner Inc for $85bn in cash before the US courts intervened with an antitrust challenge. A trial to work out whether the deal could harm competitive business practices is set to begin on March 19.

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“We remain very confident we will complete this merger,” AT&T CEO Randall Stephenson told press at the end of January.

The possible move would represent a streamline in focus for the conglomerate, which has demonstrated a competitive spirit in the race to build 5G and smart cities networks.

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Regarding the firm’s latest quarterly report, John Stephens, CFO,AT&T, confirmed a $20bn earnings boost owing to reduced tax under the Trump administration and expects a $3.4bn boost to free cash flow in 2018 for the same reason.

AT&T’s video outfit DirecTV performed well in 2017, adding 368,000 subscribers to reach a total of 1.2 million since its launch in November 2016.

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