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CenturyLink Data Centers for Sale: Four Private Equity Bidders?

Four private equity firms have formed a consortium to bid on CenturyLink Inc.’s cloud data center business, according to Reuters. The massive telco has been looking to sell the data centers for nearly a year, and a final ownership decision is expected before the end of 2016, ChannelE2E has previously reported.

Four private equity firms —  GTCR LLC, Charlesbank Capital Partners LLC, Berkshire Partners LLC and Stonepeak Infrastructure Partners have teamed up in an effort to buy the data centers from CenturyLink, Reuters says. The data centers have also attracted interest from rival data center owners and additional PE firms, the report said. Multiple reports suggest CenturyLink wants at least $2.5 billion for the data centers.

Multiple telcos began acquiring cloud services providers (CSPs) in 2010, hoping to emulate Amazon Web Services and Microsoft Azure. Two of the biggest deals arrived in 2011, when CenturyLink acquired Savvis for $2.5 billion and Verizon acquired Terremark for $1.4 billion. But the telcos were too disciplined to pursue many of the wild, wild west opportunities that Amazon, Microsoft and even IBM see as big opportunities.

CenturyLink’s cloud hosting revenues have actually fallen in recent quarters — a poor showing considering how quickly AWS and Azure have been growing. The cloud situation is equally stressful over at Verizon, which is seeking to sell its various data centers sometime this quarter.

Many telcos are now retreating to network connectivity services, where new technologies like software-defined networking (SDN) and network functions virtualization (NFV) could unlock new revenue opportunities.

Other cloud services providers are transforming toward the MSP model. Rackspace, which a PE firm also is acquiring, has been pushing hard toward managed services for AWS and Azure, for instance.

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