CenturyLink Cloud Data Centers: Sold By Q3 2016?

CenturyLink CEO Glen Post
Glen Post

CenturyLink remains focused on selling "all or a portion" of its data center business, and the telco expects to finalize the process in the late Q3 or early Q4 2016 timeframe, according to CEO Glen F. Post.

"The strategic review process for our colocation business continues to move forward and while we have work left to do, we remain optimistic about the level of interest and the prospects for a positive outcome," Post said during yesterday's earnings call. "As we've said previously, our principal focus is on the sale of all or a portion of the data centers, but we also have other alternatives should our process not result in a sale."

CenturyLink Data Center Sale Process

During an extended Q&A with Wall Street analysts yesterday, Post said the data center sale process "is going well," and there now is a "group of final contestants" bidding for that portion of the business.

"We feel good about where we are headed there and we think we'll be successful in getting the transaction done," Post added. "Again, as I said before, it will be, third quarter, maybe early fourth quarter before we finalize a transaction."

Assuming CenturyLink does sell the data center locations, the company will consider a range of options for the proceeds -- including stock buybacks, debt reduction, investment and strategic services, and other possible areas, Post said.

CenturyLink's Falling Cloud, Managed Hosting Businesses

Like many telcos, CenturyLink acquired cloud and data center assets in recent years in a bid to compete against Microsoft Azure and Amazon Web Services. But generally speaking, telcos haven't been nimble enough to keep pace with the DevOps mindset that dominates the major public cloud providers.

CenturyLink's data center, managed hosting and cloud businesses experienced revenue declines in Q1 and Q2 2016, while rivals like AWS and Azure continue to enjoy double-digit growth. In response, CenturyLink and other telcos are now focusing far more intensively on network functions virtualization (NFV), software defined networking (SDN) and other technologies that will improve their overall network services.

CenturyLink has been considering the potential sale of its data centers since late 2015. But the company has also stated that it could sell off the data center real estate while remaining in the cloud services market. Somewhat similarly, Verizon Communications expects to potentially sell its own data center businesses in Q3 2016 or so.

CenturyLink Channel Partner Program

Bill Corbin

Meanwhile, CenturyLink Channel Chief Blake Wetzel recently exited the company to join Rackspace. Westcon Group veteran Bill Corbin recently joined CenturyLink as senior VP of strategic partnerships and channel operations, and has promised to bolster the company's partner program.

Joe Panettieri

Joe Panettieri is co-founder & editorial director of MSSP Alert and ChannelE2E, the two leading news & analysis sites for managed service providers in the cybersecurity market.