Breaking: Blanken heads GTT infra division as $2.1bn deal completed

Breaking: Blanken heads GTT infra division as $2.1bn deal completed

Martijn Blanken with old Interoute map.jpg

Martijn Blanken, formerly of Telstra, has become the new CEO of what was the infrastructure division of GTT Communications.

GTT completed the US$2.1 billion sale of the division, which includes the old Interoute and Hibernia Express companies, last night to I Squared Capital (ISQ), a private equity investor, 11 months after announcing the deal.

ISQ already owns Hong Kong-based HGC Global Communications. Miami-based ISQ has assets under management in energy, utilities, telecoms and transport in the Americas, Europe and Asia.

The new company is called Exa Infrastructure and it will be headquartered in London. Blanken (pictured, with old Interoute network map) has already arrived in the city and his family will be moving from Sydney in December. Exa said this morning that around 420 employees will move from GTT to the new company. 

The deal includes the former Hibernia Networks, which GTT bought in January 2017 for $590 million; Perseus, bought in June 2017 for $37.5 million; Interoute, in February 2018 for $2.3 billion; and KPN International, bought in July 2019 for €50 million ($59 million) – a total of $2.99 billion.

It includes eight subsea cables and 14 tier-three data centres. “GTT is the result of more than 40 acquisitions and if you asked me to list all of them, I will fail.”

But, “it’s beautiful infrastructure,” Blanken told Capacity in an interview within hours of the deal’s completion. “It is 105,000 route-km of fibre, and 2.9 million km of fibre strands.”

GTT separated out management of the infrastructure operations from its services in early 2020, after it packaged up the fibre business for sale. Capacity understands the staff of the infrastructure division will stay with Exa, which is in the process of appointing a CFO.

“[Exa] is 100% separate, but there is a transition services agreement to help us fill in the gaps,” Blanken told Capacity. “And GTT will be an important client for Exa Infrastructure.”

However, at the beginning of September GTT said in a filing that once it has closed the sale of the infrastructure division to ISQ it will file a pre-packaged chapter 11 case for the rest of the company with the US Bankruptcy Court for the Southern District of New York. Capacity understands this is likely to take place within the next few days.

It is not clear where this will leave GTT’s services operation. The company has said that the $2.1 billion from ISQ will be used to pay some of the debts. Yesterday, before the news of the completion had broken, GTT’s shares on the over-the-counter market in New York were trading at 29 cents, giving the company a market capitalisation of under $18 million.

GTT was kicked off the New York Stock Exchange (NYSE) because it had failed to file any quarterly and annual results since the end of June 2020. Its shares collapsed from $60.25 in March 2018 to $3.09 in July 2021 and then further in August and September.

One of Blanken’s priorities, he told Capacity, is to rebuild confidence among customers and potential customers. “They have been holding back due to the uncertainty. We are very keen to win that business.”

He wants to move away from GTT’s transition services agreement as soon as he can. “We will adopt an open digital architecture, with cloud-based IT, as defined by the TM Forum.”

“Exa will be a data centre to data centre connectivity provider,” Blanken told Capacity. “The network is the fabric of the cloud,” and is built of data centre clusters.

Now “there is a substantial pot of money to invest in expanding our capacity”, but Exa will not move into new market sectors, he insisted. Nor is it likely to move into new geographical territory, he added.

“I’m very happy to be a dumb pipe provider. There’s nothing wrong with that: you just have to be very good at it.”

Gautam Bhandari, managing partner at I Squared Capital, said: “This is the second, complex carve-out of fibre and data centre assets from an integrated telecom company to an independent, carrier-neutral infrastructure platform that we have completed. Digital infrastructure will be a key component of global economic growth, especially in a post-Covid economy, and is a key pillar of our investment strategy. Combined with our recent transactions for Ezee Fiber in Texas and KIO Networks in Mexico, I Squared Capital has committed over $3 billion to digital infrastructure with over 120,000 route kilometres of fibre across the Americas, Europe and Asia.”

Blanken left Telstra, where he was executive director of global sales, international, in June 2018. Later he started advising ISQ on its Big Data Exchange (BDX) project, which HGC Global Communications started setting up in 2018.

“I’ve been involved since April 2020,” said Blanken, but his interest in the old Interoute date back further: “I looked at the assets for Telstra,” he said.

So did ISQ: partner Mohamed El-Gazzar told Capacity in October 2020 that ISQ had been looking at Interoute in 2017, when its previous owners – mainly the Sandoz Family Foundation – decided to sell, but it was outbid by GTT in February 2018.

Now ISQ has that and more besides for approximately $2.15 billion, including a $130 million earn-out.

Blanken began his career at KPN, the Netherlands incumbent, after an MBA at the University of Groningen. He moved with his family to Australia in 2006 and joined Telstra in 2009.

In April 2018 Capacity exclusively reported his planned departure from Telstra at the end of the financial year in June. Telstra said then he was “instrumental in initiating Telstra’s transformation into a leading network applications and services player”.

The name? Exa comes from the prefix used in exabyte, a million terabytes, or 1018 bytes, Blanken told Capacity.

Interoute applied for the trademark registration in May 2021 via London law firm Lewis Silkin. However there is already a UK company called Exa Networks, an internet service provider specialising in serving schools.



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