An article in Data Center Dynamics reported that in 2011, telecommunications companies went on an acquisition spree. Some prominent examples were cited and explained how these acquisitions were strategically positioned to benefit both telco and cloud service firm:
- Verizon’s purchase of Terremark would boost its cloud strategy
- CenturyLink’s absorption of Sawis will accelerate its cloud capabilities
- Windstream purchased Paetect three months after it launched a cloud portfolio and infrastructure expansion program
Researchers from Tier1 saw this as the telcos’ way to keep more of the traffic within their own network. This also gives them an opportunity to compensate for falling revenues from traditional voice services.
What do cloud companies get in return? – They will have access to larger customer pools. Furthermore, Telcos chose to retain their brands and allowed them to lead the charge on the data services market – meaning, they can still direct the cloud strategy.
What are the other reasons why these acquisitions were considered mutually-beneficial relationships? Find out by reading the full article at Data Center Dynamics.