Qwest weighing sale of data centers

Aug 13, 2002 12:00 PM, Kevin Fitchard

Qwest currently runs 17 Internet support centers, offering web hosting and support for its enterprise customers, but will identify 11 or 12 of its most unprofitable centers for a possible sale, the Denver Post reported Monday.

A Qwest spokeswoman wouldn’t confirm the Post story, but said Qwest has been examining its data centers along with all aspects of its business to cut down operating costs. Qwest however has no plans to sell or shut down all of its centers, the spokeswoman said.

“Every business is being evaluated,” she said. “There is certainly no indication we’re going to get out of web hosting entirely. It’s an important part of our strategy.”

Qwest’s hosting business was once part of its core Internet strategy. In 2000, Qwest and IBM signed a $5 billion deal to open and manage data centers together, and Qwest contracted with Loudcloud to manage the web operations of its enterprise customers. As data centers lost their allure, companies such as Exodus went out of business and carriers such as Level 3 have cut back on their hosting operations.

Qwest meanwhile faces immense pressure to cut back on its operating costs as it faces pressure from its investors and investigations from the SEC and the U.S. Justice Department.