GTT: Behind the scenes after the $2.3bn Interoute acquistion
Big Interview

GTT: Behind the scenes after the $2.3bn Interoute acquistion

Rick Calder NEW.jpg

GTT has bought over 30 companies in 10 years but it has now acquired its largest to date. Rick Calder, CEO of GTT, speaks to Jason McGee-Abe about the strategy behind the monumental $2.3bn acquisition of Interoute, its integration and what's next for GTT.

I meet Rick Calder, who has headed GTT for just over 11 years, in the company’s ITW meeting suite in May [Please note, the new confirmed dates for ITW 2019 are 23-26 June 2019]. He’s flanked by his marketing generals: Gina Nomellini, CMO, who joined the GTT family after One Source Networks was sold to GTT back in October 2015, and Randy Slack, VP of strategic communications, who joined in January 2017 with Hibernia Networks. In front of us lies an updated network map, which includes the recently acquired Interoute network, the sale of which was announced and signed on 26 February.

I begin by asking Calder for finer details about the takeover of the European fibre networking provider, which at the time of meeting has not been completed. Calder tells me “we expect it to close by the end of this quarter” and it certainly was. 

The purchase was completed on 31 May and provides the company with a significantly more powerful portfolio of high-capacity, low-latency connectivity, and innovative cloud and edge infrastructure services not only across North America but now in Europe as well.

“The acquisition of Interoute represents a major milestone in delivering on our purpose of connecting people across organisations, around the world and to every application in the cloud,” says Calder. “Our enhanced scale, expanded network footprint and award-winning product capabilities reinforce our position as a global leader in cloud networking. We look forward to bringing the benefits to our clients across the world.”

He starts pointing and referring to the network map on the boardroom table and positioning objects over the map to explain GTT’s strategic expansion. It instantly makes me think of playing a strategic game of chess: hence the inspiration for our front cover in this issue.


A group of investors being led by Aleph Capital Partners and Crestview Partners, significant shareholders in Interoute, said they would invest $175 million in common stock in the company once GTT closes the Interoute deal, which Calder says is a “strong vote of confidence in our vision”. “We successfully completed a debt bank financing round of $1.8 billion in the US and €750 million in Europe. It was highly oversubscribed, led by Credit Suisse and a group of six other banks at significantly lower interest rates than we thought going in. So the debt community responded very well to GTT’s financing.”

Calder stresses that they’ve been really involved in detailed integration planning and the three areas to act on once they close are organisation, systems infrastructure and network. 

First, how to put these two organisations together to create one organisation; second, the business is generally run on its core business support system, which is called the client management database (CMD), and GTT will start the work of understanding how it can integrate the Interoute business into this platform; and third, the principal opportunity is to consolidate the backbone and the transits. 

“We run a Tier 1 backbone and Interoute has two or three different Tier 2 IP backbones, so we’ll consolidate them into our network,” explains Calder. 

“There’s significant wavelength. All the wavelengths that we and Interoute have purchased for capacity on our backbones will be consolidated onto effectively our bigger backbone,” he says. 

“All three of these dimensions will be done within three or four quarters and we’re trying to do it faster if we can. The network and systems can be done relatively quickly.” But Calder warns: “It’s important to create certainty in the whole organisation as to what the team will be across the organisation.”

Changing the guard

As the acquisition closed, Capacity exclusively confirmed that CEO Gareth Williams, CFO Catherine Birkett, CTO Matthew Finnie and group general counsel Maurice Woolf had all left Interoute.

When I asked what the new-look team would be, Calder told me earlier in May: “The big change that I’m contemplating is to be consistent with our organisational structure. About a year or so ago we announced that we were moving to operating divisions to own the client experience and be much closer to the client,” he said at ITW.

“We established three operating divisions. In the Americas we have an enterprise accounts division and a carrier accounts division, run by Eric Warren and Jeff Beer, division presidents respectively. Our business in Europe was much smaller so we actually consolidated both our enterprise and carrier accounts under one leader, Martin Ford [divisional president for EMEA and AP]. We separated out a fourth division which is our small and medium-sized business clients, which we run as a centralised group.”

With the advent of Interoute, Calder says his plan is to most likely maintain this structure. 

“This is because it works quite well for us as it really focuses each of our divisional presidents and their teams on the client experience continuum, from selling, quoting, ordering, installing to billing and collections. I think Interoute can fit very well into this structure,” explains the CEO.

I directly ask Calder whether Ford will now be in charge, and he reveals: “I have one division president so I may need to create two or even three division presidents to run the European operation, like we have done in the US because it’s so big. So I may have a separate division president. I would say Interoute historically has been a little bit more centralised and so we may go to a different organisational structure. I’m not certain as we have to wait until close but that is something that I have spoken about publicly.”

From a branding perspective, Interoute is now GTT. “Publicly we’ll brand Interoute as GTT very rapidly. Our view is that we’re still a relatively small player and building brand identity and awareness across two brands is too difficult. Histor-ically, we’ve integrated and collapsed many organisations into GTT and we’ve always taken that approach to brand one company,” explains Calder, who visited most of the Interoute offices over the six weeks before ITW in May. 

I start to attain the CEO’s thoughts on innovation and automation trends in the marketplace today, given our special reports in this issue. “CIOs often tell me that their traffic is growing by 20-30% per annum at every site so the movement to open architecture is critical. The innovation that we see with cloud service providers, infrastructure and software-as-a-service providers is key, as is the need to get seamless access to those applications in the cloud,” he tells me. 

“Security is a big focal point for GTT and our fundamental role is to block threats,” says Calder, who is a big advocate for there to be deeper levels of firewall both at the premises and at the network amid surging threats. How is GTT enhancing its security services? 

“Intelligent automation and visibility for a CIO of its network will be a huge area of innovation over the coming years, particularly with the vendor community,” Calder says. “It’s an area we haven’t played deeply in directly but we’re thinking about how we can.” GTT’s DDoS product, launched a year ago, does real-time traffic inspections and proactive notifications, so the company is certainly innovating to have more predictive data and analytics.

GTT has been focused on selling to multinational enterprises in the Americas and in Europe and it’ll certainly keep doing this, alongside selling to carriers all around the globe, but what’s the next move for Calder and GTT? 

“Our strategy has been the same for almost a decade but we recognise our sales force is too small and the market opportunity in front of us is enormous so we’re rapidly trying to boost its ranks pre and after the Interoute acquisition,” he says. “We’ll continue to look for acquisitions. We probably won’t do another major one this year, given the fact that it will take us the balance of this year post close to complete the Interoute deal, but early 2019 is right around the corner so we’d like to be in a position to do other large strategic acquisitions and we continue to do smaller non-material tuck-ins to buy customer bases.” 

GTT completed deals with Canada’s Accelerated Connections in March and the Netherlands’ Custom Connect at the beginning of the year, so will the company which is now worth $2 billion carry on with these smaller acquisitions? “We still see lots of those opportunities and we may see one of those close this year as we get through the Interoute acquisition.” 

There are clearly bigger things that Calder thinks will be very strategic to think about for GTT from 2019 and he teases that although “we’re more focussed in the Americas and Europe in the short-run, I wouldn’t say that we would never do something in Asia-Pacific”. 

Gift this article