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Report: Verizon Is Exploring Selling Its Enterprise Business Assets For $10 Billion; Partners Unconvinced

Verizon partners said they doubt the report by Thomson Reuters that the telecommunications giant is considering the sale of its former MCI business and Terremark.

Telecommunications heavyweight Verizon could be shopping around its enterprise business in a potential deal worth upwards of $10 billion, according to a story published Friday by Thomson Reuters.

According to unnamed sources close to the matter cited by Reuters, the potential sale of Verizon's enterprise assets that the carrier is "exploring" would include the former MCI business, a landline and Internet service for business customers that Verizon acquired in 2005, as well as the company's data center unit, Terremark, which the carrier scooped up in 2011.

Verizon declined to comment for this story.

[Related: CenturyLink Considers Selling Its Data Centers: What Would That Mean To Partners?]

One concerned Verizon partner who requested anonymity said that upon hearing the rumor, the partner reached out to Verizon executives, who said there were "zero plans for Verizon to sell off Terremark or any of its enterprise infrastructure."

The carrier assured the partner that if anything, it is growing that business and looking for acquisition opportunities, especially in the cloud, the partner said.

"It would obviously have an impact on us as a partner, but we were assured it would not happen," the partner said.

This isn't the first time Atrion Networking, a Warwick, R.I.-based IT solution provider and Verizon partner, has heard rumors that Verizon might sell some of its assets.

"My initial reaction was, 'Wow, I can't believe this could happen,' just because of how impactful it would be for our business. Verizon is such a powerful name," said Darryl Senese, vice president of carrier services for Atrion Networking. "But when you start peeling the onion back a bit and you look at the potential impact, my opinion is that this would be very unrealistic."

Even if Verizon was seriously shopping around its business assets, the numbers don't add up, Senese said. Because Verizon acquired Terremark for $1.4 billion and MCI for nearly $6.8 billion, and because Verizon has added value to those assets since acquiring them, the carrier's own business assets would be worth more than $10 billion, he said.

"Ten billion [dollars] is such a small dent in what this business is really worth," Senese said. "I find it hard to believe [Verizon] would consider this."


Verizon also has many federal government customers, including the U.S. Department of Defense, who would have a say in the sale, not to mention the regulatory approvals the deal would run up against, Senese added.

"These government customers would obviously have to feel comfortable with whoever would be purchasing the assets, and I think that would really be difficult to pull off," he said.

The reported possible Verizon sales are leaving some in the industry wondering if this is indicative of more consolidation, coming on the heels of telecommunications provider Windstream's selling its data center operations to colocation provider TierPoint last month, and CenturyLink's saying it is exploring the sale of its own data center assets and colocation business this week.

But unlike Windstream and CenturyLink, which arguably have sold or are considering the sale of some of their assets to focus on their core businesses, Verizon's core business -- wireless -- wouldn't work without the wireline assets that the carrier is reportedly considering selling, according to Senese.

"Verizon would have to purchase wireline assets from [another provider] and who knows what the impact would be to wireless," Senese said. That’s because Verizon wouldn't own or have control over those wireline assets.

"This [rumored sale] almost contradicts what Verizon wants to do," he said. "It would be hard to pull off, but anything is possible in any industry."

PUBLISHED NOV. 6, 2015

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