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GTT Seeks to Sell Data Center Infrastructure Business

GTT Communications is seeking to sell its infrastructure division -- which includes a pan-European fiber network, subsea transatlantic fiber and data center infrastructure that were part of the Interoute and Hibernia acquisitions. The company, however, remains committed to its cloud networking business.

GTT has hired Credit Suisse and Goldman Sachs to assist with the potential infrastructure business sale.

GTT CEO Rick Calder
GTT CEO Rick Calder

In a prepared statement, GTT President and CEO Rick Calder said:

“This potential divestiture in no way alters the execution of GTT’s core strategy of providing cloud networking services to large and multinational clients as we deliver on our purpose of connecting people to any location in the world and to every application in the cloud.”

GTT's stock rose 19 percent on the disclosure.

GTT Executive Chairman Brian Thompson shared additional perspectives about the infrastructure business during an earnings call earlier this month. At the time, he drew a clear line between GTT's networking expertise vs. underlying infrastructure.

Thompson on November 12 said: "I continue to look to the future as really bright because we have put in place the ability to manage that customer experience with all of the new technologies that are out there, and to master those technologies. It is networking that's important to us. It's not infrastructure to us."

GTT Communications: Business Weakness

The potential infrastructure asset sale comes at a key time. GTT's latest quarterly financial results, disclosed November 12, failed to meet Wall Street's expectations. Revenue for 3Q of 2019 was $420 million -- down 6.4 percent year over year and about $5.7 million short of Wall Street's target, Seeking Alpha says. Also, the company's net loss was $26.2 million in 3Q 2019 -- larger than $23.4 million net loss in 3Q of 2018.

Joe Panettieri

Joe Panettieri is co-founder & editorial director of MSSP Alert and ChannelE2E, the two leading news & analysis sites for managed service providers in the cybersecurity market.