AT&T Shopping Its Data Centers Around… Again

More than 300 facilities worldwide may be on the menu; sources tell WSJ assets require “investment and attention”

Yevgeniy Sverdlik

February 3, 2018

2 Min Read
AT&T offices in San Antonio
(Photo by Toby Jorrin/Getty Images)(Photo by Toby Jorrin/Getty Images)

AT&T is once again looking to sell its data center business. After Verizon has offloaded a $3.6 billion data center portfolio to Equinix, after CenturyLink has sold its colocation business to a group of investors that used it to launch Cyxtera, and after several smaller telcos have made similar deals, AT&T is the last US telco standing, with its 300 or so colocation facilities around the globe.

It’s looked into divesting the assets at least once before, in 2015, but ended up only selling its hosting business, taken over by IBM at the end of that year. Now, AT&T has hired Bank of America to shop its data center portfolio around, The Wall Street Journal reported Friday citing anonymous sources.

Owning and operating data centers is expensive, and the other telcos who have offloaded these assets did so to better focus on other businesses. They still provide various enterprise technology services hosted in data centers, but as tenants.

AT&T appears to be thinking along the same lines. The sources told the Journal the company was looking to sell the facilities “to better focus on its core wireless and video businesses.” It’s unclear whether it also wants to sell its cloud services business.

While the portfolio is massive – AT&T says it has more than 300 colocation data centers across North America, Asia Pacific, Europe, and the Middle East – and while there’s a lot of interest in buying data center assets at the moment, the telco may have a harder time selling its assets for a good price than Verizon or CenturyLink did.

Related:Here are the 5 Biggest Data Center Acquisitions of 2017

The Journal’s sources said “the facilities will require investment and attention from prospective acquirers.” That more than likely means there are lots of old facilities in the portfolio that haven’t been upgraded for a while.

The portfolio also isn’t likely to include assets of similar “crown-jewel” status as two of the facilities Equinix bought from Verizon: NAP of the Americas, the Miami carrier hotel that acts as a primary interconnection hub for all of Latin America; and NAP of the Capital Region in Virginia, a massive campus with lots of private enterprise and government tenants.

But there’s a right price for everything, and there’s no shortage of investors looking to buy data centers, be they private equity players rolling up data center assets into platforms of scale or operators backed by institutional investors who are attracted to the business by the steady revenue stream coming from long-term clients with good credit.

Whoever bites though will be willing to spend a lot more on upgrades in addition to the purchase price.

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