Videotron selling data centre business

Quebecor Inc.’s Videotron is selling its data centre business, 4Degrees Colocation, for $259 million, with the proceeds likely going to fund future spectrum purchases, analysts say. The telecom announced Tuesday that it agreed to sell the business it acquired in 2015 for $35.5 million to California-based Vantage Data Centers, which will add the data houses in Montreal and Quebec City to expand its North American portfolio. A year ago Vantage was only in two markets, the American company said in a Tuesday release. “Based on extensive dialog with our customers, Vantage identified Montreal and Quebec City as highly attractive markets due to low power costs, tax incentives and excellent fiber connectivity,” Sureel Choksi, president and CEO of Vantage Data Centers, said in the release. Outgoing Videotron CEO Manon Brouillette said in a press release that "growth in the market for cloud-based IT solutions continues to accelerate, and the competition is global. "In this context, this transaction will enable 4Degrees to continue growing as part of a company that is present in many strategic markets in North America.” The 4Degrees deal is subject to certain conditions and Videotron expects it to close in the first half of January. Analysts said the proceeds of the deal would likely go to wireless spectrum purchases. Adam Shine of National Bank said on Wednesday the sale gives the company “more of a cushion with which to pursue spectrum licences,” while Desjardins’ Maher Yaghi called it an “early Christmas gift from Quebecor.” “We suspect it could be used to fund the upcoming spectrum auction,” Yaghi said. Videotron, which will assist customers in the migration, plowed $40 million building the Montreal centre in 2015 and expanded the Quebec City facility to achieve an industry grade of exceptional quality and reliability, it said. Yaghi noted the company made roughly double it bought the business for, with expenditures all in. Yaghi said Videotron got in at a good time to sell considering the competitive market for the data centres. That competitive intensity has been going for a while: last year, Shaw Communications Inc. sold its ViaWest data centre business for $2.3 billion, also nearly double what it paid to acquire it.

Videotron selling data centre business

Brief | December 19, 2018

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Videotron selling data centre business

Brief | December 19, 2018

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