Wednesday, 22 September 2021

PCCW offloads data centre business for $750 million

by Harry Baldock, Total Telecom
Wednesday 28 July 21

The Hong Kong-based operator said it was looking to leverage its assets as the demand for cloud computing booms

Today, PCCW, owed by billionaire Richard Li, has agreed to sell its data centre business to Digital Bridge for $750 million. Back in April, PCCW was reportedly exploring its options for the sale of its IT and data centre unit, with anonymous sources valuing the unit at around $1 billion. The business includes seven data centres in its home market of Hong Kong…

Today, PCCW, owed by billionaire Richard Li, has agreed to sell its data centre business to Digital Bridge for $750 million.

Back in April, PCCW was reportedly exploring its options for the sale of its IT and data centre unit, with anonymous sources valuing the unit at around $1 billion. The business includes seven data centres in its home market of Hong Kong, as well as one in mainland China and one in Malaysia.

By June, rumours were circling of an impending deal by DigitalBridge Group, one of the world’s largest digital infrastructure firms. 

Formerly known as Colony Capital until earlier that same month, the newly renamed DigitalBridge said that its name change reflected the business’s new strategic direction, divesting of its wider real estate investments to focus solely on digital infrastructure. 

Overall, the company manages a $32 billion portfolio that includes various digital assets, including mobile towers, data centres, fibre, and small cells.

Now, those rumours are confirmed, with PCCW announcing the sale of the data centre business for $750 million.

“DigitalBridge’s expertise investing in, building, and operating data centres to the highest standards aligns perfectly with PCCW DC’s next stage of development,” said Marc Ganzi, President and CEO of DigitalBridge. “This is a terrific platform for DigitalBridge to expand its regional presence while supporting a strong management team focused on serving many of the same hyperscale and large enterprise customers that DigitalBridge works with on a global basis.”

PCCW’s decision to divest of its data centre unit comes at a time when the demand for cloud computing is booming. Keeping up with this demand will be a financial challenge, however, hence PCCW would rather sell the assets now and focus on growth in its “core service and product offerings”. 

“The future growth and expansion of the data center business will require significant capital expenditure,” the company said. “Through the transaction, the company will have the flexibility to allocate its capital and resources more efficiently to drive growth.”

In 2020, the data centre unit made a profit of $3 million.

Subject to regulatory approval, the deal is expected to close in Q4 this year. 

 

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