GTT has acquired UNSi, a competitive business-focused service provider, for $40 million in cash and stock, a deal that will immediately expand the company's Ethernet and managed services footprint.
Similar to earlier acquisitions GTT has made, UNSi is about scaling its operations. By making this deal, GTT will gain over 2,000 U.S.-based business customers that use Ethernet and MPLS-based network solutions.
"We financed the acquisition with cash-on-hand and a $15 million delayed draw term loan under our existing credit agreement," said Michael Bauer, CFO of GTT, in a release. "In August, we completed a debt financing strengthening our balance sheet and providing the company with the flexibility to pursue accretive acquisitions, such as UNSi, which accelerate our growth strategy."
GTT has been aggressive on the acquisition front, having bought four service providers in the past three years to expand its network and service footprint.
In 2013, the service provider acquired Inteliquent's global data services business for $54 million to bolster its Ethernet interconnectivity capabilities. By making that acquisition, GTT gained an additional 120 points of presence in 24 countries, which provide IP Transit and Ethernet services to other service providers.
Earlier, it purchased London-based PacketExchange, instantly gaining 500 wholesale carrier and enterprise customers with 65 points of presence in Europe, Asia and North America. Likewise, its acquisition of WBS Connect not only expanded its IP and Ethernet portfolios, but it also gained 60 points of presence in major North American, Asian and European metro centers.
"This acquisition is clearly part of growth strategy, which is to grow organically and through acquisitions," said Rick Calder, President and CEO of GTT, in an interview with FierceTelecom. "We have bought one company every year for the last five years: we did WS Connect at the end of 2009, PacketExchange in 2011, nLayer in 2012, Tinet last year, and UNSi this year."
UNSi also adds other capabilities, including a deeper set of managed services and even broadband-based network options, to GTT's product set.
"We like managed services managed portfolio—it's slightly deeper than ours," Calder said. "It's a nice addition in terms of managed router and managed firewall that we have been talking about."
Besides managed services, UNSi will also enable GTT to deliver lower speed DSL and even wireless broadband services. At the same time, they can also upsell existing UNSi customers to their higher speed services.
"We have gotten requirements for small cap solutions using broadband and DSL resale and we have historically not focused as much on that market, but we try to do it for our clients," Calder said. "We think that's a great addition to our cloud networking services portfolio so we have the full gamut of low-capacity solutions all the way up to 10G and 100G we can provide to our clients."
Calder said that because UNSi is a direct overlay to their own operations, they can quickly integrate UNSi in the second quarter next year, adding that they will see benefits of the acquisition in the fourth quarter of this year and first quarter next year.
"We'll see some nice increases in the fourth quarter and first quarter as we integrate," he said. "We integrate very rapidly and put the business in our back office client database and put a go-to-market organizational structure together very rapidly with the team."
- see the release
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Updated article on Oct. 1 with quotes from Rick Calder, CEO of GTT.