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Summary

On February 26, US-headquartered GTT announced the largest in a series of acquisitions with the agreed purchase of European cloud services provider Interoute. The $2.3bn acquisition significantly increases GTT’s presence in Europe, as well as its cloud and SD-WAN capabilities, and its ability to compete in the highly competitive international wholesale market.

Interoute will add strength and scale to serial acquirer GTT

Interoute is the latest and largest in a series of recent acquisitions by GTT that have extended its reach to and within Europe and the Middle East. In January 2017, GTT completed the purchase of low-latency transatlantic cable specialist Hibernia Networks for $590m, and in January 2018, it announced it was acquiring Netherlands-based Custom Connect. Combined, these three transactions increase GTT’s European network scale, cloud, and SD-WAN capabilities, and its ability to compete with established players for international wholesale and enterprise customers.

Interoute’s network assets extend to 126 cities in 29 countries, including 24 metro area networks, 15 data centers, and 17 virtual data centers. It also has a reputation for developing innovative private, public, and hybrid cloud solutions. To quote the company’s tag line, it supports wholesale and enterprise customers “from the ground to the cloud”.

Although Interoute is GTT’s largest acquisition to date (whether measured in terms of price, assets acquired, or markets reached), we have confidence that GTT’s well-honed acquisition integration process will again prove efficient and effective, with minimal disruption to customers’ business. Although it still won’t be one of the largest wholesale carriers in Europe or North America, the resulting company will be a substantial competitor in the international wholesale market, where scale, efficiency, and the ability to differentiate and add value are essential for success.

Appendix

Further reading

Global Wholesale Market Leaders, TE0012-000600 (May 2017)

"Transatlantic cables race to reduce latency," TE0012-000568 (January 2016)

Author

David James, Practice Leader, Wholesale Telecoms

david.james@ovum.com

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