Verizon Communications Inc. could soon sell off up to $10 billion in assets to concentrate its efforts on expanding its wireless business, Reuters reported Friday. Sources told the news service that Verizon was weighing whether to give up information technology subsidiary Terremark and the telecommunications company MCI, which it bought in 2011 and 2006, respectively. The timeline for the potential sale was unclear.
If the plans go through, the sale could signal a renewed focus on Verizon’s core business as consumer demand moves away from landline and Internet connections and toward projects like cloud storage, video streaming and wireless capabilities, analyst Gary Kim wrote in a recent blog post. Kim noted that AT&T and CenturyLink were both also considering selling data center assets, adding that “one might therefore conclude that U.S. tier one service providers no longer believe ownership of data center assets provides as much business advantage as once believed.”
The Verizon news comes about two weeks after the company released its third-quarter earnings. While total operating revenues were up 5 percent to $33.2 billion, the global enterprise division saw a 4.9 percent decrease. Operating revenues fell to $3.2 billion in the three months preceding Sept. 30, 2015, from $3.38 billion in the same quarter a year earlier.
Discussing these results on a conference call Oct. 20, Verizon Chief Financial Officer Fran Shammo said Verizon was still working through “secular and economic challenges" -- the same phrase he used after the quarter one and quarter two earnings were released, Reuters reported.
But whether the deal would go through was still up in the air. Shammo said on the call that he could “never say never” but “at this point we’re very committed to the wireline business,” according to DSLReports. Fierce Telecom reported that a Barclays analyst was convinced Verizon wouldn’t sell its wireline assets because it needs them for “delivering high-quality wireless services.”