Are telcos making a mistake by divesting their data centers?

Summary

A decade ago, telecom operators rushed to build data centers, betting on co-location services as a natural extension of their infrastructure business. Today, the trend has reversed almost entirely, with operators across the industry divesting these assets to refocus on core connectivity. Whether that shift is the right long-term call or a costly miscalculation is now the question dividing the industry.

DBS Bank's Head of Internet and Telecom Research joins twimbit's founder and research team to debate the economics behind data center divestment, examining how capital expenditure commitments for rolling out network infrastructure compete with the resources needed to sustain a data center business against hyperscaler-dominated wholesale demand.

Whether data centers still belong in a telco's core portfolio, or are better left to specialists with deeper cloud and colocation expertise, is central to that debate. Valuation arbitrage also comes into play: whether operators divesting today could be leaving value on the table as digitisation continues to drive underlying demand for data center capacity.

  • How data centers fit into telco cloud and edge cloud strategies
  • Whether telcos can realistically pull off a data center transformation instead of a straight divestment
Are telcos walking away from a genuine growth opportunity, or making the right call by leaving data centers to specialists?

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