It’s a big week for CenturyLink. Today it announced plans to sell its global data centers and colocation business to a group of private equity funds for $2.15 billion in cash and a minority stake to be valued at $150 million.
Earlier this week, the telco announced it was buying Level 3 Communications for about $34 billion.
The investor consortium that’s buying CenturyLink’s 57 data centers includes funds advised by BC Partners, Medina Capital Advisors, and Longview Asset Management. Together, the funds will manage a newly-formed global infrastructure company led by Manny Medina and his team at Medina Capital. The consortium will assume ownership of the data centers at closing, which is anticipated in the first quarter of 2017.
The data center portfolio includes about 195 megawatts of power across 2.6 million square feet of raised floor capacity.
The sale of the data centers will help the telco fund its purchase of Level 3, which won’t close for nine to 12 months.
CenturyLink first said it wanted to sell its data centers in November 2015. Then shortly thereafter, in January 2016, Verizon said it was also selling its data centers, flooding the market with data center assets for sale. Just last month Verizon said it was nearing an agreement to sell its data centers. Rumor has it that the buyer will be Equinix.
CenturyLink determined that its business model made more sense by not owning data centers, but leasing them instead.
In today’s announcement the company said, “Though it will no longer own the data centers, CenturyLink will continue to offer colocation services as part of its product portfolio through its commercial relationships to be entered into at closing with the BC Partners/Medina-led consortium.”
It also said it will continue to focus on offering customers a wide range of IT services and solutions, including network, managed hosting, and cloud.
CenturyLink Network Virtualization
In fact, the U.S.-based telco is at the forefront of network virtualization efforts. Earlier this year it bought certain assets of Active Broadband Networks, including a virtual broadband network gateway software stack and an OpenDaylight-based SDN controller stack to help automate its network.
And it recently began offering software-defined wide area networking (SD-WAN) services with the help of its vendor partner Versa Networks.
CenturyLink has set a goal to reach full global virtualization coverage in its IP core network by 2018. This is all part of its creation of its Programmable Services Backbone (PSB) to deliver virtualized services.
