Level 3 has no plan to sell off its data centers, CFO Patel says

Level 3 Communications could potentially get a financial gain from selling off its data centers, but the company's chief financial officer maintains it will hold onto them instead.

Speaking to investors during the UBS 43rd Annual Global Media and Communications Conference, Sunit Patel, EVP and CFO of Level 3, said that it sees the data center assets as a strategic element of its business.

The service provider currently operates over 350 carrier-neutral data centers throughout North America, Latin America and Europe.

"Our view is that we're comfortable with the data center assets we have in 350 locations in 60 countries," Patel said. "We use the majority of them for own network services and we do offer data center services to our customers, typically to customers that are several times more in bandwidth than in data center services so I don't think we'll be looking to sell those assets."

While Level 3 is going to retain its data center business, it's clear that a new consolidation trend is taking place in the industry segment. A number of other service providers like CenturyLink and Windstream are taking of either selling their data center assets or are considering a possible sale.  

Earlier this year, Windstream sold its data center assets to TierPoint, a cloud and managed service provider, for $575 million in cash. Meanwhile, CenturyLink told investors during its third quarter earnings call that it is considering various options for its data center business, including a possible sale to a third-party provider.

Regardless of what the rest of the industry is doing, Level 3 will continue to offer a mix of traditional data center services and use its own data centers to build its growing set of cloud-based service capabilities, including managed IT hosting, managed security, cloud connect, and professional services.

Additionally, the service provider continues to leverage its growing global fiber and IP-based network to connect to other data center providers and cloud providers like Amazon Web Services (AWS), Equinix, Google, and Microsoft Azure.

Patel said that the ongoing demand for cloud services and the desire from customers for higher bandwidth services are key spots of growth for its business services unit, particularly in North America.

"In our industry, we're just in the early stages and we think this will pick up pace as more and more enterprises move their infrastructure into the cloud to take advantage of cheaper compute and storage resources off the cloud," Patel said. "As they do that will require connectivity to more than one cloud-based provider and that's where we will come into focus for them and we'll continue to do that."

For more:
- listen to the webcast (reg. req.)

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