Analyst: CenturyLink, AT&T, Verizon still find cloud hosting a challenging business

CenturyLink (NYSE: CTL), Verizon (NYSE: VZ) and AT&T  (NYSE: T) are still struggling to make their cloud hosting businesses a key part of their growth, but an analyst with Cowen & Company said that CenturyLink management is adamant about keeping its colocation and hosting business even though investors have pressured the company to sell it. However, he added that AT&T and Verizon might be less inclined to hold onto their cloud assets.

According to Investor's Business Daily, Cowen & Company analyst Gregory Williams wrote in a research note that the CenturyLink management still believes that its colocation and hosting business is a key differentiator and growth driver for the company.

However, he said he would not be surprised if Verizon or AT&T did sell some or all of their colocation/hosting business assets. Williams noted that at a recent investor event Verizon management said that the company's hosting business, which it acquired when it purchased Terremark, only serves specific niches like the enterprise and government security areas.

Williams emphasized that these companies are fairly new to the cloud hosting area. CenturyLink, of course, purchased much of its hosting assets from data-center company Savvis, which it acquired in 2011 for $2.5 billion.  The deal was championed because the Savvis assets when combined with the cloud and data center assets CenturyLink purchased from Qwest gave it a global reach and greater colocation and managed services capabilities. With the Savvis acquisition, CenturyLink has 48 data centers in North America and Europe plus more than 207,000 route miles of fiber.

Earlier this year CenturyLink extended the reach of its cloud service by making its hybrid IT solutions available to HP customers through a partnership with the company.  The telco has also inked a similar deal with Dell.

Meanwhile, Verizon acquired Terremark in 2011 for $1.4 billion giving it access to data centers around the globe.  The company has said that its cloud and hosting services nicely complement its machine-to-machine business that it is also building.

For more:
- See this Investor's Business Daily article

Related articles:
CenturyLink acquires Savvis
CenturyLink extends hybrid cloud services to HP customers
Verizon acquires Terremark, CloudSwitch

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