Verizon Communications Inc. (VZ) CFO Fran Shammo is expected to field questions Tuesday at the Wells Fargo Securities LLC investor conference regarding the company’s unit that serves corporations and other large companies. Verizon is reportedly weighing alternatives for the business, which includes the MCI Inc. carrier and Terremark Worldwide Inc. data center acquisitions, and has a value of roughly $10 billion, according to Reuters. A divestiture would focus Verizon more squarely on wireless and consumer service. According to an analyst, telecoms trade in mid-single digit multiples of Editda while data centers have gone for 10 to 14 times Ebitda in the M&A market. For example, TierPoint LLC paid $575 million, or 14.1 times Ebitda for Windstream Communications Inc.’s (WIND) Hosted Solutions business roughly two weeks ago. Verizon has said that it wants to regain the A3 credit rating from Moody’s it had before the $130 billion purchase of Vodafone Group plc’s stake in Verizon Wireless. The carrier is already in line to collect a bundle of cash when it closes the $10.54 billion sale of wireline operations in California, Florida, and Texas to Frontier Communications Corp. (FTR). An analyst said he expects the company to use close to $7 billion of the funds to reduce debt. Even if the conditions are not right for a deal now, the latest reports provide Shammo with a topical cue to discuss Verizon’s strategic direction and capital needs today.
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