Verizon Communications in Q3 expects to decide whether to sell or retain its cloud data centers, the company confirmed today. The massive IT service provider has been trying to sell the data centers for at least $2.5 billion in an auction process since early 2016 or perhaps even late 2015.
During an earnings call with Wall Street earlier today, the massive service provider didn't mention its public cloud or data center businesses by name. Finally, toward the end of the call, a Wall Street analyst asked for an update on the potential data center sale.
CFO Francis Shammo's reply:
"On the data center sales we are coming to an end of the process. And we will probably come to a definitive answer in the third quarter as to whether we're going to move forward or we're not. And so I'll hold comment for the third quarter for that."
Verizon is expected to announce Q3 results sometime in October 2016.
Potential Verizon Cloud Data Center Sale: Why?
Like many telcos, Verizon once hoped to compete against Amazon Web Services in the public cloud market. But more recently the company has focused on three core priorities:
- Sustaining quality and performance leadership across all Verizon networks;
- building new ecosystems around our broadband, video, and Internet of Things global platforms; and
- monetizing investments in networks and platform through applications and content.
"I'm very pleased with the progress that we are making across all of these fronts," CEO Lowell McAdam said during today's call.
Telcos and Cloud Data Centers: The Big Struggle
Still, he didn't get into the cloud services -- an area where most telcos and many technology giants found it too difficult to compete head-on against AWS and Microsoft Azure. In addition to a potential change of course for Verizon, the market pivots so far have included:
- AT&T exited the managed hosting market, essentially punting the business to IBM SoftLayer’s management.
- CenturyLink has been trying to sell nearly 60 data centers, though the company says it will continue to offer cloud services even if it doesn’t own the physical buildings that host the services.
- Hardware giant Hewlett Packard Enterprise killed its own public cloud to offer managed services for third-party clouds.
- Early cloud pioneer Rackspace has hedged its bets, introducing managed services for third-party clouds.
- Windstream Holdings sold its data center business for $575 million to TierPoint in 2015.
ChannelE2E will continue to track the potential Verizon cloud data center sale in the days and weeks ahead.
