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Verizon Will Sell Data Centers to Equinix In $3.6 Billion Deal

December 6, 2016, 1:58 PM UTC
Verizon signage and logo on its building at 375 pearl street
NEW YORK CITY, NEW YORK, UNITED STATES - 2015/10/17: Verizon signage and logo on its building at 375 pearl street, New York city. The building is windowless and has a simple architecture. Verizon is a large American broadband and telecommunications company based in New York City but incorporated in Delaware. (Photo by Roberto Machado Noa/LightRocket via Getty Images)
Roberto Machado Noa—LightRocket via Getty Images

Verizon Communications, the No. 1 U.S. wireless carrier, is selling 29 data centers to Equinix for $3.6 billion, as the telecom giant focuses on its core business.

The data centers being sold are located in 15 metro areas in the United States and Latin America, including New York, Atlanta, Chicago, Bogota and Sao Paulo.

The sale represents Verizon’s efforts to streamline its business and follows the divestment last year of a chunk of its landline business and a portfolio of wireless towers.

The enterprise telecommunications industry has had to adapt in recent years to corporate customers seeking more sophisticated and cheaper offerings to manage their data.

Verizon (VZ) has been facing stiff competition from companies such as T-Mobile (TMUS) and Sprint (S), which have been offering deep discounts on cellphone and data plans.

Reuters reported earlier this year that Verizon had launched an auction to sell the data center assets.

The company said about 250 Verizon employees, mainly in the operations functions of the acquired data centers, will become Equinix employees.

For Equinix (EQIX), the world’s biggest provider of data centers, the acquisition further bolsters its presence in the Americas.

The acquired portfolio includes about 900 customers, bringing Equinix’s total number of data centers to 175 in 43 markets.

Equinix was advised by Evercore, J.P. Morgan Securities and Davis Polk & Wardwell.

Citi and Guggenheim Partners were financial advisers to Verizon, while Jones Day provided legal counsel to Verizon.

Shares of Verizon and Equinix were up marginally in premarket trading.