Verizon Communications Inc.VZ - the current market leader in the U.S. telecom space - has denied rumors relating to the disposal of its enterprise business. A recent report in Reuters stated that Verizon is exploring the sale of its enterprise assets worth $10 billion. However, Verizon shunned the report, calling the same "factless" and a "conjecture". The assets in this context are MCI and Teramark, which Verizon had bought five years ago.
The Businesses in Question
Verizon had purchased data center and cloud companies MCI and Teramark to compete effectively in the cloud computing space. The idea was to fuse the assets with its own to expand capacity and achieve sales growth. However, the data center configurations emerged less feasible to be executed on a large scale.
Notably, Verizon's enterprise-focused cloud services have struggled to deliver and have failed to live up to its potential. This may be a result of the recent trend whereby corporate cloud requirements are shifting toward the public cloud computing base run by companies such as Amazon.com Inc. AMZN and Microsoft Corp. MSFT . However, Verizon stated that it is committed to keep funding its enterprise solutions business and views the same as an important element within its portfolio.
In a separate development, Verizon rejected a spectrum leasing agreement with DISH Network Corp. DISH in the Chicago and New York markets, citing high valuation invoked by the latter. Verizon stressed that it would be more feasible if the company builds those assets on its own instead.
The Bottom Line
While Verizon has brushed aside its divesture rumors, calling it a mere speculation induced by rivals, it remains to be seen how much Verizon will be willing to invest in its enterprise solutions business and whether the company will be able to create value in cloud computing, going forward. Verizon's investment plans to build its AWS-3 spectrum infrastructure after the fallout of the spectrum leasing deal with DISH also calls for attention.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.