AT&T is just the latest telco to offload some or all of its data centres to a new generation of non-competitive colocation companies as it shifts emphasis to core connectivity provision and cloud service delivery from third party hosting facilities.

Following persistent rumours the US carrier agreed a US$1.1bn sale of 31 of its colocation assets to Brookfield Infrastructure Partners, the infrastructure owned by Brookfield Asset Management that runs a diverse range of global utilities, transport, energy and communications infrastructure.

It’s not that AT&T doesn’t need of the hosting capacity, at least not in the short term. The terms of the deal will see the telco become Brookfield’s biggest customer as it continues to lease back the data centre space it used to own to meet enterprise customer requirements and jointly sell and resell AT&T cloud and connectivity services.

There is a strong suggestion that AT&T may need the money to pay help pay off the considerable debts incurred in the acquisitions of DirecTV and Time Warner, but there is a larger trend at play – rather, it seems the carrier just doesn’t see certain colocation facilities as meeting its own profitability expectations when it comes to owning them outright.

That is a familiar trend. One of AT&T biggest rivals CenturyLink sold 57 hosting facilities to a consortium which became Cyxtera (led by former Terremark CEO Manuel Medina) for US$2.2bn in 2016. At the time CenturyLink needed funds to finance the US$34bn acquisition of Level 3 Communications, but it also continues to be one of Cyxtera’s biggest customers for hosting capacity (and a company within which CenturyLink holds a 10% stake).

Other examples of telcos cashing in on their data centre assets include Verizon, which sold 24 data centres to Equinix for US$3.6bn in 2017, and Windstream which sold its 14 data centres to TierPoint for US$475m in 2015.

After a wholesale shift to providing cloud services at the turn of the decade, it seems the telcos have realised they cannot compete with the superscale strength of AWS, Microsoft, Google and IBM, and have tempered their ambitions accordingly.

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