Report: Verizon mulls $10B sale of enterprise business

Verizon (NYSE: VZ) is considering a sale of its enterprise assets, which could fetch the telco as much as $10 billion, according to a Reuters article citing people close to the company.

If such a sale were to take place it would include the enterprise unit formerly known as MCI, which Verizon acquired in January 2006, and its Terremark data center business.

Verizon is reportedly examining how the asset sales could be structured and there's no guarantee a deal could happen. These unnamed sources added that Verizon's enterprise assets might not be easy to separate and any potential buyer would likely have to sign commercial agreements with the company.

One potential bidder for the assets could be CenturyLink (NYSE: CTL).

The sources claimed that CenturyLink began discussions with Verizon about purchasing some of its enterprise assets but could not agree on terms. At the same time, Citigroup has been advising Verizon on a possible sale.

Neither Verizon, CenturyLink nor Citigroup would provide comment to Reuters.

News of Verizon considering a sale of its enterprise business comes at a time when a number of the largest traditional wireline players are realigning or rethinking their enterprise service divisions.

Verizon has continued to weather a tough revenue storm in its enterprise business, a trend that continued into the third-quarter. During that period, the service provider said a series of secular and economic challenges has created struggles in its Global Enterprise and Wholesale units as third-quarter revenues declined 4.9 and 5.8 percent to $3.21 and $1.46 billion, respectively.

Fran Shammo, CFO of Verizon said that the combination of new cloud competitors and pricing issues has made revenue growth in the enterprise segment a challenge.

"On the enterprise piece, I guess what I would say is we're seeing more or less the same and there's been no change," Shammo said. "There's a lot of competition and there's a lot of price compression continuing in the IP space."

Fellow ILEC AT&T (NYSE: T) has been looking at selling its data center business, while Windstream recently sold its data center business to TierPoint in October for $575 million, enabling it to focus more attention on expanding its fiber network to provide higher-speed broadband services to businesses and consumers.

But AT&T and Windstream aren't the only ones looking to make a change in their business services holdings. CenturyLink said during its third-quarter earnings call that it was considering a number of options for its data center business, including a partnership or joint venture, a sale of all or a portion of the data centers, or keeping some or all of these assets and operations as part of CenturyLink's portfolio.

For more:
- Reuters has this article

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