Rumors that Windstream was looking to sell off its data center and cloud arm proved to be correct this morning. The hybrid ILEC/CLEC has entered into an agreement to sell its Hosted Solutions division to TierPoint for $575M in cash.
The two companies also established a reciprocal strategic partnership under which they can each resell the other's products and services through referrals. In other words, Windstream will still be selling data center and cloud to enterprise customers, just through Tierpoint rather than directly and to a wider geographical footprint. Meanwhile, Windstream will be able to spend its capital on its core telecommunications businesses.
Prior to today's deal, Tierpoint operated 14 facilities in 9 states, offering a mix of colocation and cloud/managed services. The acquisition of Windstream's Hosted Solutions division looks like a pretty good fit to that business, bringing with it a presence in the southeastern and midwestern USA. They have been quite acquisitive over the last few years, buying both Xand and CxP, and I wonder if they have yet more acquisitions in mind.
Windstream bought Hosted Solutions in 2010 for $310M after acquiring various fiber and CLEC assets, integrating 5 new facilities into its existing data center footprint and positioning the company for the cloud era. However, the situation has evolved rapidly since, and this year has been one of changes for Windstream. Back in the Spring, they spun off CS&L with much of their network assets and now they've sold off their data centers as well.
That leaves them infrastructure-light as compared to the past, focusing on higher levels of networks and data services. Unless of course the next step is to sell the rest of the company. That doesn't seem to be on the table yet, but you never know.