It’s a done deal, CenturyLink (NYSE:CTL, news, filings) has completed the purchase of Savvis, continuing the tranformation of what was once a lesser-known copper-heavy ILEC into a global fiber and datacenter operator. The deal was just announced on April 27, meaning they got this done in a mere two and a half months – quite impressive.
CenturyLink will integrate its existing hosting business into Savvis’s more extensive managed hosting and cloud business, while keeping the Savvis brand intact. That parallels Verizon’s treatment of Terremark thus far, and makes sense. Neither wants to be thought of as ‘telco colocation’ but rather maintain the carrier neutral cloud power mojo that they bought into. So we can expect them to stay at arms length where they can. Savvis’s cloud offerings were fairly well advanced, so CenturyLink’s usage of those assets to target the enterprise space could ramp up quickly if they decide to step on the gas.
Meanwhile, CenturyLink can consolidate Savvis’s shrinking-yet-still-tier-1 network with the former Qwest network, which was also a tier 1 backbone. It will be interesting to see how they do that at the fiber level, as Savvis’s network was built on a couple of strands of Level 3 dark fiber, while of course Qwest has their own fiber build. Do they return Savvis’s fiber to Level 3 and move everything to the Qwest backbone? Or do they keep that extra footprint to add diversity and coverage to that of Qwest?
This also marks the moment when CenturyLink truly went international. Yes, Qwest had international assets and business, but they were at heart very much focused on the USA. Savvis is another story, having had a substantial foothold overseas in the financial vertical amongst others.
At closing, CenturyLink repaid $546M of Savvis’s debt, while each share of Savvis stock became $30 plus 0.2479 CenturyLink shares. CenturyLink expects $70M in annual opex and capex synergies during the integration.
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Categories: Datacenter · ILECs, PTTs · Internet Backbones
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random opinions:
1. congrats to welsh carson who finally got out of this disasterous, 12 year saga by selling — to who else — a roll up not looking at anything other than quarterly accretion stats.
2. the managed hosting angle is interesting, but IT services are very different animals than telco services (especially rurual telco). Can anyone name a CIO that wants to buy key, hosted and mission critical services from an RLEC or bell-co? If so, why do EDS, IBM, CSC et al control the market for data services?
3. to the extent this is a “data center play” note that it has challenges at the physical layer. It appears that the new centuryqwavvis owns the largest collection of old data centers inthe industry. most or all of the qwest cyber centers and savvis (exodus) data centers were built in the late 1990’s to density and other levels far below current standards. also, what is the useful life of these assets? in reality, they are done, but in GAAP-land, did they just get “stepped up” again??