CFO: CenturyLink Could Still Offer Colo If Data Centers Are Sold

CenturyLink still could offer colocation services to it customers via wholesale model if it decides to sell its data centers.

That’s according to Stewart Ewing, CenturyLink’s executive vice president and chief financial officer. He spoke to investors during this week’s Citi 2016 Global Internet, Media & Telecommunications Conference.

Last fall, CenturyLink told investors it may consider selling its data centers. The telco giant gained 18 data centers when it purchased Qwest in 2011. It then picked up additional facilities when it bought Savvis that same year. With Savvis, it also picked up managed services and cloud services.

CenturyLink became a colocation provider through the acquisitions.{ad}

“When we bought Savvis, we indicated that we really would not invest in the data-center business such that we would be able to grow revenues at the same rates that the colocation companies would get … because we just simply didn’t want to make the investment there,” Ewing said. “And we bought Savvis more so for the managed services and cloud.”

After operating the facilities for a few years, CenturyLink has decided that “we don’t really have to own the data centers so we’re going to run through a process to see what level of interest is out there and our ability to monetize that asset, and if we can’t we’ll keep it,” he said.

“But we think that if we can monetize it, we can still sell colocation services from a wholesale perspective with whomever we sell the data centers to, or potentially other colocation providers, as well as … continue to be a customer of that business from the standpoint of managed services cages for customers being in those data centers, as well as the cloud pods that are in some of those data centers,” Ewing said.

CenturyLink wants to keep the managed services and cloud services pieces because, when coupled with its network and IT services, it gives the company a differentiator between it and others that aren’t able to “put the whole package together for customers,” he said.

“So as more midsize and enterprise customers, and smaller customers start moving their infrastructure from their data center and closets to the cloud, we think that we can facilitate that process for customers, and it will give us, again, a differentiator,” Ewing said.

Other telcos are making major decisions regarding their data-center assets. This week, Reuters reported that Verizon Communications has started a process to sell its data-center assets as it focuses on its core business. It reportedly hopes to sell the assets for more than $2.5 billion.

In October, Windstream announced the sale of its hosted unit to TierPoint for $575 million.

Kelly Morgan, research director at 451 Research, said there’s been no apparent downside for telcos selling their data-center assets.

“I think that so far there haven’t been a lot of drawbacks,” she told Channel Partners. “It all depends on the pricing.”