Level 3’s CFO: No Plans to Sell Off Data Centers

Level 3 Communications’ executive vice president and chief financial officer this week said his company has no plans to sell off its data centers.

Sunit Patel spoke to investors during the UBS 43rd Annual Global Media and Communications Conference. Level 3 operates more than 350 carrier-neutral data centers throughout North America, Latin America and Europe.

“Our view is we are comfortable with the data-center assets we have,” Patel said. “We have them in about 350 locations over 60 countries. We use the majority of that space for our own network platform. We do offer data-center services to our customers, typically to customers who are buying several times more in bandwidth revenues than what they need in data-center services from us. So I think in general we would not be looking to (sell) those assets.”

While Level 3 is going to retain its data-center business, other industry consolidation is taking place. In October, Windstream announced the sale of its hosted unit to TierPoint for $575 million. Also, CenturyLink told investors it may consider selling its data centers.

Patel said ongoing demand for cloud services and customers’ desire for higher bandwidth services will fuel growth of Level 3’s business services unit, particularly in North America.

Patel said in his industry “we’re in the early stages” and will accelerate as more enterprises move their infrastructure to the cloud to take advantage of much cheaper compute and storage resources.

“As they do that, it will require connectivity, in some cases to more than one cloud-based provider, and that’s where we will come into focus for them as they make that transition,” he said. “We are one of the most connected companies to all of the cloud providers out there … so we think that, in general, demand for bandwidth is the key driver for our business, so as people continue to consume more bandwidth … we will certainly take advantage of that.”

A webcast featuring Patel’s comments can be heard here.

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