Bell selling 25 data centres for $1.04 billion

BCE Inc. is selling 25 data centres located at 13 sites to California-based Equinix Inc for $1.04 billion, the company announced Monday. "Our strategic redeployment of capital further underscores Bell's commitment to champion customer experience by leading investment in communications networks and services, especially as Canada manages and recovers from the COVID-19 crisis," Bell CEO Mirko Bibic said in the release. The transaction is all cash, according to the release. As part of the deal, Bell Business Markets will become Equinix's Canadian partner, and Bell's business clients will use Equinix's cloud computing products. Bell will continue to operate five other data centres. In a note published by Canaccord Genuity analyst Aravinda Galappatthige Monday, he wrote that "this will be a positive for the stock given that the valuation is solid (ahead of our expectations) and it affords BCE greater balance sheet flexibility going into the spectrum auctions." Given that Rogers Communications Inc., Telus Corp. and TeraGo Inc. all own data centres, Galappatthige wrote, "we expect that revaluation of these assets may occur as investors see the potential value hidden within these firms." RBC Capital Market analyst Drew McReynolds agreed in a Monday note that "the transaction enables BCE to redeploy capital to more strategic opportunities (such as network investment including spectrum)." "The transaction is also consistent with the divestiture of data centres by other Canadian telecom operators with data hosting and co-location services becoming increasingly commoditized and requiring substantial scale," he wrote. Last year, Cogeco Communications Inc. sold its data centre business for $720 million to a California-based investment firm, Digital Colony. Cogeco had bought the business back in 2012 for $526 million. Last year Digital Colony also bought fibre internet provider Beanfield Technologies Inc. -- which operates 366 kilometers of fibre infrastructure in Toronto and Montreal that connects commercial and apartment buildings to data centres -- for an undisclosed amount. In 2018, Quebecor Inc.'s Videotron sold its data centre business, 4Degrees Colocation, to California-based Vantage Data Centers for $259 million. The deal is expected to be finished in the second half of the year, according to the release, pending regulatory approvals.

Bell selling 25 data centres for $1.04 billion

Brief | June 1, 2020

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Bell selling 25 data centres for $1.04 billion

Brief | June 1, 2020

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