Nitel last week acquired Hypercore Networks in a move CEO Margi Shaw said is part of an “inorganic growth strategy” for the Chicago-based network provider. Hypercore is the company’s first acquisition since it received investment from U.K. private equity firm Cinven last December.  

“Hypercore is the perfect match for us. While our businesses are similar, we complement each other in a few key areas that create additional value for customers and partners,” Shaw said in a statement. 

Nitel focuses on managed internet connectivity services like SD-WAN and was valued at $700 million when Cinven announced it would back the company. The Hypercore deal strengthens Nitel’s footprint in the U.S. as well as bolsters efforts to establish an international presence.

Additionally, Nitel will be able to integrate Hypercore voice solutions and SD-WAN platforms to its portfolio. Shaw told Channel Futures that Nitel is hoping to “grow the business aggressively to expand our service footprint and product lines.” 

The deal echoes an increased focus on inorganic growth strategies across the industry, with some calling the trend “service provider cannibalization.”  

IDC analyst Craig Robinson told SDxCentral earlier this year that the move toward inorganic growth can be attributed in part to talent shortages. “They’re acquiring organizations to fill that need because there’s only so much that you can get out of other pools,” he said. “It’s growth by cannibalization.”

For example, Comcast Business last year acquired Masergy to bolster its managed SD-WAN and secure access service edge (SASE) business. In 2021 alone, Ericsson, Palo Alto Networks, and Cisco spent more than $13 billion in combined acquisitions. Cisco led that group, closing five deals to fill gaps in sectors like optical routing, security, and observability. 

However, the inorganic strategy is not only a means to growth for larger organizations, but can also be welcomed by smaller companies being acquired. All of Hypercore’s founders will remain at the combined company, and see the acquisition as a chance to bring their "significant strengths and culture" together with Nitel's assets.

“This sends a strong message to the marketplace as we stake our claim to a leadership position in the NaaS arena. The opportunities for our staff, our customers and our partners are very exciting, and we are eager to be a key part of Nitel’s success moving forward,” Hypercore co-founder Josh Dickinson said in the acquisition announcement.