Mumbai: In a move to focus on its mobile video advertising business, Verizon Communications has announced plans to sell off its 29 Data centers in the United States and Latin America to Equinix for USD 3.6 billion. Equinix has said that the deal would give the company access to new locations and partners and it would bring new business prospects to partners.
Christopher Rajiah, who leads worldwide channel sales and partner alliances for Equinix, said the 29 new data centers are a boon for the company’s partners. “The deal provides Equinix and its channel partners a larger combined footprint of cloud service providers and networks, which further enhances our ecosystem attractiveness to our combined end-customers,” he told Channel Partners.
Equinix, based in Redwood City, California, operates as a real estate investment trust, mostly holding interconnected data centers. The Verizon deal adds up to about 900 new customers for Equinix.
The new portfolio brings the company’s total to 175 data centers globally and 17 million gross square feet in five continents. It will also take about 250 Verizon employees that operate the facilities. Equinix CEO Steve Smith called it another step in the expansion of his company’s “global platform.”
“It enables us to enhance cloud and network density to continue to attract enterprises, while expanding our presence in the Americas. The new assets will bring hundreds of new customers to Platform Equinix while establishing a presence in new markets and expanding our footprint in existing key metros,” Smith said adding, “The deal will also provide significant value for shareholders as the proposed transaction is expected to be immediately accretive to our adjusted funds from operations per share upon close.”
Verizon which bought data center company Terremark Worldwide for USD 1.4 billion in 2011, has been facing stiff competition from companies such as T-Mobile US Inc TMUS.N and Sprint Corp (S.N), which offer deep discounts on cellphone and data plans. Hence, the company is shedding assets and turning the business in a new direction. Verizon has pivoted to mobile video and advertising by making high-profile acquisitions – it is buying Yahoo for $4.83 billion, and had picked up AOL for $4.4 billion last year.
The sale to Equinix, which is expected to close in the middle of next year, would help replenish Verizon’s cash after it acquires Yahoo for $4.83 billion and bids for coveted airwaves in a federal auction.