Verizon Exec Denies It’s Selling Off Cloud Infrastructure

November 10, 2015, 4:43 PM UTC
Photograph by Getty Images/Image Source

Fran Shammo, Verizon’s chief financial officer, strongly denied recent reports that the company is selling off the infrastructure underlying its cloud business.

These stories are “factless conjecture with no foundation,” Shammo said in response to a question at the Wells Fargo Securities 2015 Technology, Media & Telecom Conference on Tuesday.

Late Friday, Reuters reported that Verizon was weighing a sale of enterprise assets, including what used to be known as MCI and Terremark, a data center-and-cloud company Verizon bought 5 years ago to boost its presence in cloud computing. The report said the company was seeking up to $10 billion in a potential sale. A Verizon spokesman had no comment on the report.

Timing was awkward, coming just days before Verizon (VZ) issued its annual State of the Market: Enterprise Cloud Report on Monday.

Shammo also speculated that sources of this talk might be competitors trying to spook big business customers.

That may be so, however it’s also true that Verizon’s enterprise-focused cloud services have struggled to gain traction in a world where many corporate workloads are flowing to public clouds run by Amazon (AMZN) Web Services and Microsoft (MSFT) Azure.

Sources close to Verizon have said that changes of top management from John Considine to Siki Giunta and strategic direction in the cloud unit have hurt Verizon’s efforts.

An executive who was at the company after it bought Terremark said the idea then was to pool Verizon and Terremark data centers to achieve scale. But that didn’t turn out to be feasible since Verizon was heavily reliant on VMware (VMW), EMC (EMC), and Cisco (CSCO) gear. That technology combo aligns closely with traditional data center configurations but was (and still is) less applicable to the massive scale of something like AWS that must support lots of different users on shared infrastructure.

“Verizon data centers as they existed were not cloudable and there wasn’t enough automation to make that business more scalable without a ton of more investment,” said this former exec who requested anonymity.

But back to Shammo.

He said Verizon will keep funding in its cloud business. “This is part of our portfolio and we’ll continue to support it,” he said, adding that Verizon has invested hundreds of millions of dollars annually in this infrastructure and will continue to do so.

Just exactly how much business is flowing from business server rooms to outside cloud providers and which of those providers is best positioned to benefit from that trend will be a topic next week at the Structure Conference in San Francisco.

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