Verizon Communications is trying to sell its cloud data centers and co-location centers for at least $2.5 billion in an auction process, Reuters reported. It could be the latest sign that big telcos can’t compete head-on against Amazon Web Services, Microsoft Azure and other big public cloud services providers (CSPs).
Verizon in late 2015 dismissed claims that it was trying to exit the cloud services market, but Reuters’ latest report is pretty detailed.
“… mark a reversal of its strategy to expand in hosting and colocation services after it acquired data center operator Terremark Worldwide Inc in 2011 for $1.4 billion. The so-called ‘colocation’ portfolio up for sale includes 48 data centers, and generates annual earnings before interest, tax, depreciation and amortization of around $275 million, one of the people said.”
Citigroup Inc. is advising Verizon on the possible sale of its data centers, Reuters added.
Telcos Can’t Compete With Amazon, Microsoft Azure
If the auction process is true, it’s the latest sign that big telecom companies can’t effectively compete against Amazon Web Services and Microsoft Azure in the public cloud market.
Skeptical? Consider these additional realities across the telco, hardware and hosting markets:
ChannelE2E wonders if Verizon is hoping to mirror CenturyLink’s strategy — potentially selling the data center footprint but hanging on to the associated cloud services. We’ll update this coverage if/when Verizon offers a statement on its cloud services strategy.