Canada's Shaw Communications buys ViaWest for $1.2B update from July 2014

Canadian telco Shaw Communications has agreed to buy Colorado-based data center provider ViaWest for $1.2 billion in a massive expansion of its data center play. The current ViaWest management team will stay on board to run the company.

Shaw offers cable television and Internet services in addition to operating Canada’s Global Television network. Shaw is acquiring ViaWest from private equity firm Oak Hill Capital partners and other shareholders. Oak Hill acquired ViaWest in 2010. The firm has invested in a number of companies in the data center sector, including Savvis, TelecityGroup and Cincinnati Bell.

Shaw is based in Calgary, which is located in the midwest of Canada, and ViaWest gives it a strong position in the U.S. ViaWest has more than 350 employees and 27 data centers in eight key markets.

It has been undergoing aggressive expansion. The company recently opened a huge data center in Denver and another one in Chaska, Minnesota. It also opened a data center in Phoenix last February.

Canadian rival Telus has also been expanding its data center business. Data centers are an attractive proposition to communications conglomerates, as outsourcing continues to grow. The rational was similar for another Canadian cable provider Cogeco, which acquired Peer 1 Hosting for $482.5 million. Like Cogeco, Shaw doesn’t offer a mobile service and sees data centers as a big revenue opportunity.

Beyond Canada, examples of telcos getting into the data center business include Time Warner cable's acquisition of NaviSite, Verizon's acquisition of Terremark, TDS Communications' OneNeck IT deal and NTT's purchase of RagingWire. The growing data center industry represents an attractive new business line and source of growth for cable conglomerates who operate in commodity industries.

"With the acquisition of ViaWest, Shaw gains significant capabilities, scale and immediate expertise in the growing marketplace for enterprise data services," Brad Shaw, CEO of the Canadian telco, said.

Shaw acquired Enmax, which operates fiber-optic networks in Calgary, for about C$225 million last April.