AT&T Poised to Follow Verizon's Lead, Sell Data Centers

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Another major service provider might sell its data centers.

An unnamed source told the Wall Street Journal that AT&T is discussing the possibility with Bank of America. The potential sale would draw approximately $1 billion. The source says the current data-center earnings before interest, taxes, deprecation and amortization (EBITDA) is $135 million.

AT&T lists 26 North American data centers on its website and 57 worldwide.

The WSJ writes that AT&T wants to move away from “capital-intensive data centers” and focus on wireless and video.

Multiple large carriers have decided to move on from their data centers. Windstream sold its infrastructure business to TierPoint for $575 million in 2015, Verizon sold its data centers to Equinix for $3.6 billion in 2016, and CenturyLink most recently sold its data center and colocation unit to a consortium of private equity firms in a multibillion-dollar deal.

“AT&T is selling its data facilities as strong appetite from both cash-rich strategic buyers and new entrants like infrastructure firms, are driving up prices for such assets. The sector continues to expand rapidly as organizations consume larger amounts of data and outsource more information-technology services,” the Journal said.

It’s not the first time AT&T has considered selling the business unit, according to the story. The company considered selling its data center and managed hosting businesses before divesting its hosting to IBM in 2015. The new reports have not indicated an interested buyer, and story author Jaewon Kang writes that the discussions “may not result in a deal.”

Selling the data centers would shore up a little more capital for AT&T’s pending $85 billion offer for Time Warner. The companies will face antitrust opponents in court on March 19.

Kang also reported last week that data center operator Expedient is seeking advice from RBC Capital Markets for a potential sale.

Read one of our stories about the state of the data center colocation market.