With more than 30 deals in hand, GTT Technologies CEO Rick Calder isn't about to push away from the M&A table.
Calder said in an interview with FierceTelecom that acquisitions both large and small were still on the table for his company.
GTT, which is based in McLean, Virginia, announced in February that it was buying Interoute, one of Europe’s largest independent fiber networks and cloud networking platforms, for $2.3 billion in cash. That deal closed on May 31 and GTT has moved ahead with the integration of Interoute.
In March, GTT snapped up Accelerated Connections (ACI), which is a Toronto-based provider of managed networking, voice-over-IP (VoIP) and colocation services, in order to expand its footprint into Canada. Those deals followed on the heels of buying Hibernia Networks, Perseus, Global Capacity and Transbeam last year.
The deal to buy Interoute gives GTT a multinational presence and the ability to offer services such as managed SD-WAN to global clients. When the deal was announced, GTT said it expanded its Tier 1 global IP network with a 72,000-km fiber network in Europe as well as over 400 points of presence, spanning 24 metro areas and interconnecting 126 cities across 29 countries.
GTT launched its VMware/VeloCoud cloud-based SD-WAN service last year while Interoute used Silver Peak's SD-WAN technology for a virtualized customer premises equipment solution. GTT maintains that the use of different vendor platforms offers the opportunity for it to deepen its SD-WAN product offering to better serve individual client requirements and multinational clients.
In this Q&A, which was edited for clarity and length, Calder talks about his company's acquisition strategy, as well as the competitive landscape for SD-WAN
FierceTelecom: What makes your SD-WAN service stand out from all of the competitors' offerings on the market?
Rick Calder: I think to be a proven player in it you have to be a networking player, right? So to be able to maintain and control application traffic flow over a wide area network you want to be a network player. Moreover, you want to be a network player with key internet experience asset. As a top internet backbone (provider) that's key for us.
The other real technology asset is to have diversity, so access to diversity. One of the real strengths of GTT trading with local partners around the world is the ability to give people diverse, secure connectivity to every location and manage that connectivity over an application-aware SD-WAN controller.
So we think we're very well positioned for it. It's still in the early phases of adoption, but we think over the next two, three, four years that the majority of networks will transition from legacy technology to application aware SD-WAN technology.
FierceTelecom: But there are least 50 SD-WAN vendors in the market, as well incumbents such as Orange that have SD-WAN services deployed as well?
Calder: We've seen the vendors, right? Sort of the people providing equipment to us like Cisco, etc. I less view them as network competitors. People like Orange, absolutely. Incumbents all have stories behind them, although interestingly, the incumbents are first and foremost worried about cannibalizing their rates. So they position SD-WAN as an add-on to their existing incumbent technology and we say, "Well, that's great. You want to spend more money, go for it."
We view it as replacement for your incumbent technology, not an addition to your incumbent technology, as a way to save money. That's the real interesting troika of SD-WAN. Your networking technology lets you to take advantage of the public internet and it can give you much deeper awareness, visibility and control.
Number two, we believe we are a better network provider to deal with. We live different values. And three, you can save a lot of money. What's interesting is as their (customers') traffic demand grows, it's not like their CEOs are giving them lots more budget. They're saying, "No, figure out how to do it for less."
And so that's one of the real things that we can walk in with. I would say our main competitors are the incumbents and they all have their SD-WAN stories, but they're all trying to protect their rates.
FierceTelecom: Specifically, they want to protect their MPLS services?
Calder: Absolutely. It is a higher cost technology.
FierceTelecom. What about the growth of the company? It seems like you've been on a pretty good roll of late.
Calder: Yeah, we continue to grow. I mean, we have two real parts of our growth strategy and we call them our "next financial objectives" along the way. When I joined, we were a $50 million company back in 2007 and we're approaching $2 billion now, so we've had some growth phases. That is our next financial objective, is to achieve $2 billion in revenue. It's not our goal. It's not our end point. It's just the next financial objective.
Once we achieve it, we can announce another "next financial objective." We expect to continue to grow much faster than the market. There are really two facets to that. One is obviously acquisition. We've done a significant number of acquisitions, and as we said on our earnings call at the beginning of August, our funnel is quite robust and large, both larger strategic acquisitions, which we're very focused on, as well as smaller tuck-in acquisitions that are part of our organic growth strategy because we throw them right into our divisions and we manage them.
The other part of our strategy is division rep growth and making sure that we continue to grow the scope and scale of our sales force across our four major operating divisions: our Americas division, our Carrier division, our U.K. division and our Europe division. We think there is tremendous opportunity to continue to grow in those divisions and drive organic growth through our reps in our divisions and these small tuck in acquisitions with the target of double-digit growth across those two dimensions. We think that that's right in front of us.