Contact: Scott Denne Al Sadowski
CenturyLink reaches deeper into dedicated services with the acquisition of disaster recovery vendor DataGardens. The deal is the latest of several by CenturyLink as it continues to expand its legacy telecom business into hosting, managed services and cloud as its wireline calling and networking business shrinks amid a shift toward mobile and VoIP calling.
Terms of the transaction weren’t disclosed, but it falls on the lower end of CenturyLink’s purchases, and is likely more reminiscent of AppFog ($15-25m) than Tier 3 (click here for our estimate on that sale). While small, the acquisition does show a subtle shift in CenturyLink’s M&A strategy in that it’s looking toward more specialized services to layer on top of its existing assets.
Its past deals that transformed the company from a telecom services provider into a multitenant datacenter business were high-priced platform plays. Its $2.5bn pickup of Savvis brought CenturyLink into the hosting and colocation arena, and its takeout of Tier 3 gave it an infrastructure-as-a-service platform. DataGardens adds a disaster recovery service to that platform. We expect CenturyLink to continue to build and buy additional dedicated workloads for its Tier 3 technology, especially services such as disaster recovery that it can upsell to its legacy business networking customers.
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