Insight Bite: I Squared Buys Infrastructure Division of GTT Communications

In a world reliant on more data, faster – strategic datacenters and fibre assets are critical to technology growth.

Global investment fund I Squared Capital is positioning itself to become a key provider of this critical infrastructure. The infrastructure fund has acquired the Interoute and Hibernia assets of GTT Communications in a move that will make it a European cloud networking powerhouse.

The deal, which is worth $2.15 billion, will see I Squared take over some of the busiest backbones of the internet and support most of Europe’s internet traffic. The sale of GTT’s high-speed infrastructure includes three transatlantic submarine cables, 14 datacenters, 100 colocation facilities and a 100,000 km European fibre network. As the datacenter and fibre market evolves, I Squared is well positioned to take advantage of growing demand for colocation, edge data services and global bandwidth growth in what has been an un-loved but uniquely strategic network for many years. It has been rumoured that long-term plans include a merger with Hong Kong-based fibre optic company, HGC Global Communications, acquired by I Squared Capital for $1.9 billion in 2017.

“This is part of our digital strategy where we are effectively taking fibre network assets in Asia, Europe and the US, with the intention of growing them,” said I Squared Capital Managing Partner Gautam Bhandari in a statement.

For GTT, the sale will help to reduce its debt, which according to reports from May, sits at $3.3 bn. The firm will then be free to focus on “GTT’s core strategy” of providing cloud networking services to large and multinational clients.

With the cloud-computing industry expected to continue its rapid growth over the next few years, this could be a shrewd, although bold move for I Squared. Big data, machine learning, and other compute intensive tasks are all driving more interest in edge computing, and combined with digital transformation tailwinds from coronavirus, lead to a promising long-term outlook for the datacenter and fibre market outside of the hyperscale players.

Moving into 2021, we are likely to see continued demand for network assets as those with enough liquidity seek to capitalise on accelerating digital transformation. Although there are few as unique and of the size of the Interoute and Hibernia assets.

Philip Miller, Vice President and Acuity Advisors’ Datacenter Practice Lead comments:

“As the dust settles on this transaction, the highly valued assets of Interoute and Hibernia are finally in a loved home. The future investment strategy in this business is key as it seeks to re-establish itself in a competitive European fibre and carrier market.

The future of digital strategy and the market for Enterprise workloads outside of hyperscale platforms will determine the future success and I Squared are well placed to capitalise on these market trends.”

Philip Miller, Vice President

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