Yesterday, Cincinnati Bell (NYSE:CBB, news, filings) announced that it will purchase high density datacenter specialist CyrusOne from ABRY Partners for $525M. The acquisition will add seven data centers in Houston, Dallas, and Austin to their portfolio which already included facilities in Cincinnati and Chicago. In total, they will have 609K square feet across 17 facilities, which is becoming a rather substantial footprint. CyrusOne was growing rapidly, rising 86% in 2009 to $58M in 2009 and apparently was already at a run rate of $73M.
The first thought that came to mind here was that this isn't Cincinnati Bell's first foray outside its usual turf, nor is it the first time Texas was involved. In the last bubble of course, Broadwing was their vehicle until it all went bad and they wrote off the debt while selling the network to Corvis, after which the assets eventually wound up in Level 3's hands. So now it's colocation? They seem to be an ILEC that forever dreams of not being an ILEC. Following the purchase, this segment will contribute around a quarter of the company's revenues - worth keeping an eye on.
The second thought that came to mind was: just what is ABRY doing, selling off a high growth datacenter business they bought just over two years ago? Raising money for something else perhaps? They are currently buying RCN including its RCN metro division, so we have them selling (rapidly growing) datacenters while buying metro fiber. Perhaps it isn't such an unlikely scenario that they are preparing to use those RCN Metro assets as a roll-up platform. Or not, since they do have quite a large portfolio - it could be unrelated.