Windstream and TierPoint include ongoing partnership as part of transaction
Telecommunication services provider Windstream said it plans to sell its data center business to TierPoint for $575 million. The deal, which is structured as an all-cash transaction, is set to boost TierPoint’s current operations in the cloud, colocation and managed services sectors.
As part of the deal, Windstream said it plans to sign an “ongoing reciprocal strategic partnership with TierPoint” designed to allow both companies to sell their products and services to each others’ customers “through referrals.” Windstream said this arrangement will allow it to “focus capital on its core telecom offerings while continuing to offer traditional data center services to enterprise customers across a broader data center footprint.”
“Data center services will remain an integral component of our enterprise service offering,” explained Windstream President and CEO Tony Thomas. “We expect the divested data center business to continue its significant growth under the leadership of TierPoint, and we look forward to partnering closely with them to provide advanced data center services to our enterprise customers.”
Windstream noted its data center business on an annualized basis generates $122 million in revenue and $40.8 million in adjusted operating interest before depreciation and amortization, though at an operating loss of $8 million.
The data center market has recently seen a number of high-profile entrants, including Apple, which announced plans to open a $2 billion facility in Arizona, Zayo bolstering its business with a $675 million acquisition of Latisys Holdings, and Nokia Networks entering the space through its AirFrame solution set.
Windstream recently received $175 million from the Federal Communications Commission as part of the federally subsidized Connect America program to rollout broadband services covering 400,000 rural locations across 17 states.
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