Global Internet service provider GTT Communications is buying Global Capacity for $100 million in cash and 1.85 million shares of GTT common stock. GTT’s stock has been trading in the $33 range for the past three months. GTT is touting the acquisition as a way to boost its nascent software-defined networking (SD-WAN) service for its enterprise customers.
GTT owns and operates a global Internet backbone built on Juniper Networks’ MX gear, according to Samir Desai, a director of product management at the company.
“Where we differ from more established carriers is the fact that although we own our own global backbone, we have strong relationships with a whole number of local access or middle-mile carriers to source the most optimal local access connectivity to a particular enterprise client,” said Desai.
GTT finds Global Capacity appealing because of its last-mile connectivity assets. Global Capacity uses its One Marketplace for customers to build interconnections with networks across a range of geographies.
“The key benefit we saw lies in the fact they have access through their own copper-based infrastructure into a whole bunch of last-mile addresses,” said Desai. “That gives us increased access capacity.”
You don’t often hear providers bragging about “copper-based infrastructure.” And Desai acknowledged that copper is associated with unreliability. But apparently, the more crucial thing for GTT is Global Capacity’s existing connections with enterprises. “I think we look at it as: you get the ubiquity of access with the last mile over Ethernet,” he said. “Their footprint is a good way of hitting these end points quickly with just the right connectivity.”
Over time, the copper-based access connections could be upgraded.
With Global Capacity, GTT expands its network reach with last mile connectivity to more than 9.6 million U.S. commercial addresses.
GTT has already chosen VeloCloud’s SD-WAN technology, and it’s on the verge of rolling it out globally to its first SD-WAN customers. The software is deployed in gateways at its global points of presence (PoPs). Many of its PoPs are co-located in Equinix data centers, and GTT uses Equinix Cloud Exchange.
At the customer premise, GTT deploys VeloCloud’s edge software bundled with hardware. “We want to control a provider’s end-to-end SD-WAN experience on our core network backbone,” said Desai. “You only get a true SD-WAN experience if you can bookend with GTT on both ends.”
Coincidentally, Global Capacity is also using VeloCloud’s SD-WAN software.
As far as the acquisition of Global Capacity, in addition to its last-mile connectivity assets, GTT also picks up new clients in the health care, application service provider, retail, and carrier markets. The parties expect the transaction to close by the end of the third quarter.