Diversity & SD-WAN Drive GTT-Global Capacity Deal

Acquisition lets GTT add greater diversity to its access connections, enabling SD-WAN product to meet more enterprise cloud connectivity needs.

June 26, 2017

3 Min Read
Diversity & SD-WAN Drive GTT-Global Capacity Deal

GTT's latest acquisition is designed to make that company a major disruptor in the SD-WAN marketplace, according to its top executive.

GTT Communications Inc. CEO Rick Calder tells Light Reading in an interview that his firm acquired rival Global Capacity for $161 million in cash and stock because of the latter's "very deep footprint of last-mile edge connectivity" that can now be added to the software-defined wide-area networking (SD-WAN) options his company delivers for always-on cloud connectivity. (See GTT to Buy Global Capacity .)

Global Capacity, with its One Marketplace system of automating last-mile connections over multiple carriers, adds 41 data centers and 1,750 Central Office points of presence (PoPs) to the GTT array, with a major recent emphasis on Ethernet-over-Copper connections into businesses. Combined with fiber, cable and LTE access, the EoC footprint gives GTT major new diversity to offer as part of its SD-WAN service.

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"That positions us well with respect to SD-WAN, where clients want multiple different diverse paths that can be managed through a software layer," Calder says. "We think the combination of that last-mile edge with our Top 5 Internet backbone network, which connects seamlessly to any cloud service with very little latency, positions us to be incredibly disruptive in the SD-WAN marketplace."

Both companies had selected Velocloud as their SD-WAN provider for services announced earlier this year. (See GTT Launches Managed SD-WAN Service With VeloCloud and Global Capacity Takes 'Holistic Approach' to SD-WAN.)

Diversity of connections is a key piece of GTT's strategy because it enables the carrier to offer enterprises assurance of connectivity to their cloud-based applications without requiring them to pay for more expensive options such as MPLS, and thus makes its services more competitive, Calder says.

This is the third acquisition GTT has made in the past month, and its largest ever in terms of revenues, but Calder insists the company isn't focused on growth by checkbook, and walks away from more potential deals than it makes. Global Capacity was a longtime rival, also a supplier and sometimes partner, and GTT was very familiar with its business and how the two companies could benefit from combining. (See GTT Buys Perseus for $37.5 Million.)

Global Capacity CEO Jack Lodge says the decision to sell was the next logical step in a strategy launched 18 months ago to position the company to best take advantage of the opportunity offered by the cloud. That strategy included increasing the reach and bandwidth available at the edge of the network, but also increasing the number of aggregation points with an eye toward global expansion and moving upstream into more managed and value-added services.

While it has been working on all three fronts, "the combination with GTT made the more specific sense when you look at all three points," he commented in an interview. "It was the fastest way for us to achieve the strategic vision we had laid out."

Calder expects the deal to close later this year, possibly in the third quarter, following required regulatory approvals. He promises rapid integration of the two firms after that.

Lodge expects to see GTT integrate the One Marketplace platform into its portfolio and also use Global Capacity's network aggregation platform as well.

— Carol Wilson, Editor-at-Large, Light Reading

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