Verizon agrees to offload cloud and hosting arm to IBM

By:
James Pearce
Published on:

IBM agreement follows the recent completion of Verizon’s $3.6 billion data centre deal with Equinix

Verizon has continued to offload some of its assets after agreeing to sell it cloud and managed hosting service to IBM for an undisclosed fee.

The US operator finalised the sale of its data centre division to Equinix yesterday (2 May 2017) and is continuing its move away from enterprise cloud services with this latest divestment.

As part of the agreement, Verizon and IBM have also agreed to work together on a “number of strategic initiatives involving networking and cloud services”, although no further details were shared.

George Fischer, SVP and group president of Verizon Enterprise Solutions (VES) said: “This agreement presents a great opportunity for Verizon Enterprise Solutions (VES) and our customers. It is the latest development in an ongoing IT strategy aimed at allowing us to focus on helping our customers securely and reliably connect to their cloud resources and utilize cloud-enabled applications. 

“Our goal is to become one of the world’s leading managed services providers enabled by an ecosystem of best-in-class technology solutions from Verizon and a network of other leading providers.”

As of its most recent financial results, Verizon has seen sales from its enterprise solutions division fall, from $2.5 billion a year ago to $2.47 billion. The sale of 27 data centres to Equinix and this latest deal with IBM will likely see this fall further.

It is part of a change in strategy for Verizon. Instead the telco has shifted the focus of its major investments to content, with the looming $4.48 billion takeover of Yahoo following a similar deal for AOL in 2015. Verizon has also been expanding its media services.

It is also looking to become a leading operator in the deployment of 5G, having announced a number of key 5G network trials.

Verizon’s decision to depart the public cloud business follows similar moves from a number of companies in the last few years. Cisco announced plans to cease its $1 billion cloud operations from April, while HPE shut down cloud-arm Helion in January of last year.