Verizon plans to sell its business for $10 billion

November 10
12:09 AM 2015

Verizon Communications Inc. is considering to sell parts of its enterprise which could be worth as much as $10 billion. The company plans to focus on its core business.

According to Reuters, Verizon is still exploring how to structure a sale. It might not be easy to separate the enterprise assets and the buyer would likely have to sign commercial agreements with the company. It is said that no deal is imminent for now.

The company  would sell the business formerly known as MCI, according to Computer World. Verizon acquired MCI in 2006 for $8.4 billion. The business provides landline and internet services for large business customers.

The giant internet service operates a global network and offers services in more than 140 countries. It is said that 99% of Fortune 500 companies are the customers of this service.

The sale would also include Verizon's data center unit, Terremark. Terremark offers services which include managed hosting, disaster recovery, data storage, and cloud computing. Verizon acquired this cloud service business in 2011 at a $1.4 billion deal.

Verizon, like other telecommunications companies, had been pressured to provide more advanced and cheaper data management to corporate clients.

Other companies including AT&T  also considered selling some of its data centers. While Windstream Holdings has completed a sale of its data center business to TierPoint for $575 million.

Verizon has been shifting its core business to mobile services and connected devices in the Internet of Things. Earlier this year, Verizon said it would sell its consumer wireline operations in California, Florida, and Texas for $10.5 billion to Frontier Communications.

However, the company's internet service still shows high numbers of subscribers. Verizon's FiOS home fiber network still has 6.9 million customers and 5.8 million of TV subscribers. While Verizon's Wireless service is one of two dominant mobile operators in the U.S. It serves 110.8 million retail connections.

Other companies have responded to Verizon's sale plans, including CenturyLink Inc. and Citigroup Inc. Wireline provider CenturyLink has placed bid at Verizon assets earlier this year, but could not agree on terms. 

While Citigroup Inc. has been advising Verizon on the possible sale of the assets which have estimated around $2 billion.

According to The Street, Verizon Inc. has multiple strengths which should give the investors a better performance opportunity.

The company's revenue growth has slightly outpaced the industry average of 1.7%. The net income increased by 9.3% when compared to the same quarter one year prior, going from $3,695.00 million to $4,038.00 million.

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