TDS Rides on Cloud Biz - Analyst Blog
June 29 2011 - 12:53PM
Zacks
Telephone and Data Systems
Inc. (TDS) plans to acquire OneNeck IT Services, a
data hosting and information technology (IT) company. The estimated
takeover price is $95 million.
The acquisition was approved by the Federal Trade Commission and
is expected to close on July 1. We believe the purchase of OneNeck
will give Telephone and Data Systems a good opportunity to expand
its operations in managed hosting and cloud services offerings.
Telephone and Data Systems has significantly improved its
competitive position in the rapidly evolving managed hosting and
cloud services business. The company purchased VISI Inc. in March
2010 and TEAM Technologies in December 2010 to expand its offerings
in the cloud computing sector.
Telephone and Data Systems is a diversified telecom
services
provider offering wireless services through its subsidiary
U.S. Cellular Corp. (USM) and
wireline services through TDS Telecom.
Telecommunication carriers are rapidly entering the cloud
computing business due to increased competition and changing
consumer habits. This will help operators to differentiate their
products and services and pave the way for strategic alliances
between telecom and IT companies.
In this context, the company’s largest competitor
Verizon Communications Inc. (VZ) acquired IT
service company Terremark Worldwide Inc. in April 2011 while
AT&T Inc. (T) plans to invest $1 billion in
network-based cloud, mobility and network sourcing solutions in
2011. The third-largest landline operator CenturyLink
Inc. (CTL) also plans to buy Savvis Inc.
(SVVS) in the second half of the year.
We are maintaining our long-term Neutral rating on Telephone and
Data Systems. The stock retains the Zacks #3 (Hold) Rank.
CENTURYTEL INC (CTL): Free Stock Analysis Report
SAVVIS INC (SVVS): Free Stock Analysis Report
AT&T INC (T): Free Stock Analysis Report
TELEPHONE &DATA (TDS): Free Stock Analysis Report
US CELLULAR (USM): Free Stock Analysis Report
VERIZON COMM (VZ): Free Stock Analysis Report
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