Verizon's Shammo says company may sell data center business

Verizon's (NYSE: VZ) chief financial officer confirmed during a fourth quarter earnings call that the telco is looking at options for its data center business.

Speaking to investors, Fran Shammo said that it is looking to see if the data center business is something the company should keep or sell to another provider.

"As Lowell McAdam and I have always said, we'll continue to look for opportunities," Shammo said. "The data center is an exploratory exercise to see if the asset is more valuable inside or outside of the portfolio."

Shammo added that the company sees the role of its data center assets being similar to its wireless towers, which it sold last year to American Tower for $5.1 billion.

"I view that asset similar to the way we view towers," Shammo said. "Is there a way to monetize this asset that contributes value to our shareholders and gives us the capability to move that capital into higher returning assets for Verizon?"

However compelling a data center sale could be for the company, Shammo emphasized that it has not yet made a deal and is looking to see what makes sense for the company.  

"There's no decision that has been made and this is an exploratory exercise and as we explore it and if the numbers come out like they did on towers then we'll execute on a transaction," Shammo said. "If it doesn't then we won't, but at this point we will always look at opportunities to monetize the portfolio to the benefit of our shareholders."

Shammo's comments follow a report that emerged earlier this month that Verizon has hatched a plan to sell its data center business in a potential $2.5 billion deal.

One of the sources cited in a Reuters article said that Verizon's colocation assets include 48 data centers, which currently generate earnings of about $275 million.

In November, rumors emerged that Verizon was going to sell its entire enterprise business for $10 billion, a unit that includes the former MCI, which Verizon acquired in January 2006, and the Terremark data center business. Among the potential suitors for that unit were CenturyLink (NYSE: CTL), but no deal ever materialized.

Verizon hasn't shied away from shedding assets. Besides selling off its tower business, Verizon is in the process of selling its wireline properties in three states -- California, Florida, and Texas -- to Frontier Communications for $10.5 billion. In December, the deal was approved by California's public utility commission, clearing the last regulatory hurdle it needs to close the acquisition on schedule later this year.

For more:
- hear the earnings webcast (reg req.)

Related articles:
Report: Verizon may sell data centers for $2.5B
Report: Verizon mulls $10B sale of enterprise business
Verizon likely won't sell wireline assets, says analyst firm
Verizon's Shammo: We'll have FiOS coverage in 70 percent of our East Coast footprint

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