"Windstream is looking to put up for sale its data center business, Windstream Hosted Solutions, reports Bloomberg citing people close to the company. According to Bloomberg, the telco has hired Royal Bank of Canada to help it sell the division with hopes of raising $500 million to $750 million. Some of the potential parties cited by unnamed sources that could be interested in purchasing Hosted Solutions include private-equity players ABRY Partners and GI Partners.
Similar to its ILEC brothers Verizon (NYSE: VZ) and CenturyLink (NYSE: CTL), Windstream bought its way into the data center business by purchasing the hosted solutions business from ABRY in 2010 for $310 million.
Since that time it has has continued to build upon its data center and related services base, scaling its footprint to 25 centers in 16 markets.
Entering the data center business made sense for Windstream as it gave the company another revenue source in the business market to battle the ongoing declines of its traditional wireline POTS (plain old telephone service) business.
What may be driving Windstream to consider a sale of the business are two factors: costs of maintaining these facilities, and competition from competitors like Amazon (NASDAQ: AMZN), a dominant data center and cloud services player. A recent Synergy Research reportrevealed that Amazon Web Services (AWS) continued to hold a dominant spot in the cloud infrastructure market.
During the second quarter, data center and related managed IP-based services were a factor in the company's revenue results. Due to the demand for IP-based solutions and next generation data, enterprise service revenues were $485 million, up 3.5 percent from the same period a year ago. Likewise, data and integrated solution service revenues within Enterprise also grew approximately 7.3 percent.
Within the enterprise services business, the service provider also launched a number of other complementary initiatives, including an expansion of its on-net building fiber footprint, a move that will reduce network access costs to Tier 1 service providers like AT&T (NYSE: T).
Windstream did not respond to FierceTelecom for comment by press time.
- Bloomberg has this article"