AT&T may end up selling its data centers in order to fund its pending acquisition of Time Warner, The Wall Street Journal reports, citing people close to the company. The Dallas, Texas-based wireless carrier is said to have already considered the idea of divesting its data center assets but has now supposedly revived that plan and approached the Bank of America in order to explore its options. Insiders claim AT&T could potentially raise over $1 billion through such a move and while the divestiture hence wouldn’t fund a major portion of the acquisition, it would provide the firm with additional cash to streamline the process.
Offloading the division likely wouldn’t be problematic due to its profitability, with insiders claiming its annual EBITDA stands at approximately $135 million. Besides allowing the mobile service provider to secure extra cash for the Time Warner deal, the move would also allow it to streamline its operations by offloading a venture that’s technically profitable but not widely successful relative to the rest of its business. The hosting part of the unit was already sold in 2015 to IBM who also bought Verizon’s cloud and hosting division in mid-2017. AT&T’s reported plan would likely lead to more consolidation in the data center industry as the most likely buyers for its assets would be private equity firms that already own significant stakes in similar ventures.
It’s presently unclear what the latest development means for the future of Digital Life, another AT&T division the company considered offloading in order to secure enough resources for a painless acquisition of Time Warner, as some insiders claimed last summer. The deal itself already passed all but one of many antitrust reviews it was subjected to, though its final hurdle comes in the form of the Department of Justice that sued to block the acquisition late last year, much to the surprise of many industry watchers and AT&T itself. The company remains adamant its proposed consolidation will go through but was recently forced to push its completion deadline once again, having said it’s expecting to conclude the matter in mid-2018. The $85.4 billion merger was originally announced in late 2016 and is now set to be the subject of a high-profile trial scheduled to start on March 19. AT&T recently said it’s still open to negotiating a settlement with the DOJ but doesn’t anticipate such a turn of events.