US telco CenturyLink has received multiple expressions of interest in its data centre business, according to president and CEO Glen Post. The Louisiana-based company is still deciding whether to sell all or part of the assets outright, or go with a joint venture or partnership agreement.
US telco CenturyLink (NYSE:CTL) has received multiple expressions of interest in its data centre business, according to president and CEO Glen Post.
Speaking during the company’s Q4 2015 earnings call, Post said it has made good progress with its strategic review of the data centre business, first announced last November.
“We have established a separate data centre/colocation organisation, including a separate management team,” he said. “We are also nearly complete with carve-out financial statements … to provide to potential acquirers or partners, and we spoke to a number of interested parties who expressed interest in all options, ranging from an outright purchase … a partnership, and a joint venture.”
The ongoing strategic review could result in any of these outcomes, including a sale of the entire, or part of the data centre and colocation business,” he added, noting that the company intends “to fully engage” interested parties within the next fortnight or so.
As in November, Post said that while the company considers the data centre and colocation business an important part of its hybrid IP solutions, it does not believe it needs to own the assets. He also stressed that the asset has good margins and is growing.
“We think we can drive higher returns by investing those dollars in network and other areas,” he said, adding that as data centre valuations are good right now, it is a good time to do a deal.
Asked whether other companies’ plans to divest data and colocation centres have affected the level of interest in CenturyLink’s, Post stressed that the company is seeing “significant interest”, including from potential strategic buyers.
Windstream (NASDAQ:WIN) sold its data centre business to data centre specialist TierPoint for US$575m last October and Verizon (NYSE:VZ) is reportedly looking to sell its data centres for some US$2.5bn.
Monroe, Louisiana-based CenturyLink reported operating revenues of US$17.9bn for FY 2015, down from US$18bn in 2014. Core revenues fell to US$16.1bn from US$16.3bn the previous year, while operating cash flow was down to US$7bn from US$7.1bn. The company attributed the reduced operating revenues to declines in voice, low-bandwidth data and data integration revenues. However, it said this was partially offset by increased demand from business customers for high-bandwidth data services, growth in high-speed internet and pay-TV revenues, and CAF Phase II funding.
