In charge of beautiful infrastructure
Martijn Blanken has crossed the world from Sydney to take charge of what’s now Exa Infrastructure. Under new ownership, it used to be Interoute, Hibernia Networks and other companies. He talks to Alan Burkitt-Gray
The face on the Zoom screen is familiar. The person who is taking over as the new CEO of Exa Infrastructure, what was GTT’s infrastructure division, now owned by a private equity investor, is Martijn Blanken, last seen in public more than three years ago.
That was when he told us on Capacity that he was leaving his role as group managing director and chief customer officer at Telstra, after nine years with the group, working in Sydney and Hong Kong.
The industry welcomed the Exa news when Capacity broke it in September 2021. Ellie Sweeney, whose departure as Telstra’s executive director of global sales, international, had been announced on the same day in 2018 as Blanken’s, wrote on LinkedIn: “Martijn, this is just fantastic news and well deserved. Exa has not only great assets, people and now a very, very focused CEO. Congratulations on the new role. Can’t wait to see where your drive takes Exa Infrastructure.” Both ex-Telstra executives took a six-month sabbatical in 2018.
Sweeney is now COO of Australia’s Vocus Group. Blanken has rounded the planet to turn up at Exa, whose name comes from the prefix used in exabyte (a million terabytes, or 1018 bytes). London-based, he is now close to where he started out in the industry, at KPN in the Netherlands, 25 years ago.
Indeed, some former KPN infrastructure is now part of what Exa owns: one of GTT’s last purchases, in December 2019, was KPN International, the Netherlands group’s provider of global IP network services to carriers and enterprises. That, at €50 million, was one of then-GTT CEO Rick Calder’s more modest acquisitions in his later years.
$3 billion in three years
The company Calder led spent almost $3 billion in three years: Hibernia Networks, for $590 million in January 2017; Perseus, in June 2017 for $37.5 million; then, in February 2018, Interoute for $2.3 billion.
There were others in Calder’s list, mainly smaller: PacketExchange, nLayer Communications and Tinet, formerly Tiscali International Network, the acquisition of which gave it tier-1 status.
But something happened in March 2018, while Calder was still on his spree – all the time assuring Capacity’s writers, including me, that GTT was integrating its new acquisitions smoothly and going to market successfully under the unified brand. On 16 March that year the shares, quoted on the New York Stock Exchange, peaked at $60.25.
That peak was three weeks after GTT announced the takeover of Interoute, a deal that was completed on 31 May the same year. GTT’s shares the following day were $46.05, a drop of about 25% in a few weeks. GTT shares never went to their March heights again.
Just after completion in May 2018, we on Capacity spoke – on condition of anonymity – with former Interoute staff, including some who were staying on and some who were leaving. Many were dismayed and shocked that Calder had told them that GTT would no longer sell dark fibre: one of the market rationales for Interoute’s 20-year existence was erased from the catalogue.
That 2018 decision continued to rankle, even three years later: a former Interoute executive told me just weeks ago that they could not understand the move. This person told me how hard it had been to sell capacity on GTT’s infrastructure because of the danger of imminent bankruptcy.
One-company dotcom crash
By the end of 2018 GTT shares were $23.96. A year later, at the end of December 2019, they were $10.11. GTT had become a one-company dotcom crash. For much of 2021 shares have been under $2, and were just five cents – a nickel, that is – at the start of October.
GTT put its infrastructure division on the market in late 2019, with the details being circulated to the industry after January, just as the pandemic was rolling round the world. It took its advisers, Credit Suisse and Goldman Sachs, until October 2020 to find a buyer, and another 11 months to complete the deal: for $2.1 billion. The buyer is I Squared Capital (ISQ), which already owns Hong Kong-based HGC Global Communi-cations. ISQ has assets under management in energy, utilities, telecoms and transport in the Americas, Europe and Asia.
Exa includes eight subsea cables and 14 tier-3 data centres. “GTT is the result of more than 40 acquisitions and, if you asked me to list all of them, I would fail,” says Blanken. But, “it’s beautiful infrastructure. 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. Exa “is 100% separate, but there is a transition services agreement to help us fill in the gaps,” says Blanken. “And GTT will be an important client for Exa Infrastructure.”
However, at the beginning of September GTT said in a filing that once it had closed the sale of the infrastructure division to ISG 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. (Natalie Bannerman interviews Calder’s successor as CEO of GTT on page 33 about that company’s strategy.)
At Exa Infrastructure, one of Blanken’s priorities, he tells me, 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.”
Connecting data centres
The new focus is that “Exa will be a data centre to data centre connectivity provider. 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 insists. 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.”
Behind the scenes Blanken had been advising ISQ for around 18 months, concentrating on its Big Data Exchange (BDX) project, which HGC Global Communications started setting up in 2018.
“I have been involved since April 2020,” says Blanken, but he readily admits that his interest in the old Interoute dates back further: “I looked at the assets for Telstra,” he says.
Outbid in 2018
So did ISQ: partner Mohamed El-Gazzar told me 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.
El-Gazzar told me last October, hours after the deal was announced, that he might be looking for further purchases to add to the Interoute/Hibernia/KPNI purchase once it was completed. “There are a lot of bolt-ons you could do – tier-2 and tier-3 cities and data centres.”
That’s now going to be Blanken’s task, with the support of his shareholder.
But a number of people in the wider ISQ business, including El-Gazzar and senior executives at Exa and HGC, have been consistent in saying that there is no plan to merge the London and Hong Kong companies. However, it’s also clear that having such a world-spanning wealth of expertise in the group will be enormously beneficial for all.
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 we on 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”.
Now that he’s CEO of Exa, he says: “We are determined to become the undisputed leader in the digital infrastructure industry in the European, trans-Atlantic and North American market. In order to achieve that ambition, we will make material investments to expand our network footprint, in close collaboration with our customers, to meet the ever-growing need to carry data around key routes in the region.”