YOU ARE AT:CarriersAT&T may be selling its data centers

AT&T may be selling its data centers

AT&T is once again exploring a sale of its data center assets, according to The Wall Street Journal. As it prepares for the potential $85 billion purchase of Time Warner and a year of record capital spending, AT&T could raise at least $1 billion from the sale of its data center assets.

AT&T owns data centers in 14 U.S. cities, including Atlanta, Dallas, Chicago, New York, Los Angeles and San Jose. The carrier also owns data centers in the Asia Pacific region, as well as in Western Europe and Brazil.

Data centers are essential to communications networks, but carriers can lease data centers or racks within them. When it comes to actually owning data centers, companies that are organized as real estate investment trusts often see the best returns, meaning that AT&T’s assets could be worth more to a REIT buyer than to AT&T. Private equity firms are also interested in data centers right now because they are expected to benefit from exponential network data growth as the internet of things and 5G evolve.

Verizon recently sold its data center business to Equinix for $3.6 billion, one of 48 data center mergers and acquisitions announced last year. Many smaller players are finding it very hard to compete with giants like Amazon Web Services (AWS), Microsoft, Google and IBM. AT&T itself recently expanded its reliance on AWS for cloud services.

In addition, AT&T and other carriers are distributing data center capabilities throughout their networks as they move more computing power to the edge of their networks to support low-latency wireless applications, like self-driving cars and telemedicine.

Financially, data center sales will be less significant to the top carriers than their tower asset sales were. AT&T sold its tower portfolio to Crown Castle for $4.8 billion in 2013, and then Verizon followed suit by selling to American Tower for $5 billion in 2015.

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ABOUT AUTHOR

Martha DeGrasse
Martha DeGrassehttp://www.nbreports.com
Martha DeGrasse is the publisher of Network Builder Reports (nbreports.com). At RCR, Martha authored more than 20 in-depth feature reports and more than 2,400 news articles. She also created the Mobile Minute and the 5 Things to Know Today series. Prior to joining RCR Wireless News, Martha produced business and technology news for CNN and Dow Jones in New York and managed the online editorial group at Hoover’s Online before taking a number of years off to be at home when her children were young. Martha is the board president of Austin's Trinity Center and is a member of the Women's Wireless Leadership Forum.

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