Interoute

» see interoute.com as it lived, on the wayback machine

~ the obituary ~

You were never a customer of Interoute and neither was I. That is not distance, it is the product description. Interoute sold capacity to the companies that sold internet access to people, so the only way to have touched it was to have had a packet leave your country on a cable somebody else was renting. Twenty-three years of that, and almost nobody whose traffic it carried ever saw the name.

It was founded in 1995 in London and it was built for the moment everyone got wrong. The late-1990s theory held that Europe needed a privately owned fiber grid to compete with the former state monopolies, and a dozen companies borrowed against that theory at once. Then the demand curve arrived late and the debt did not. English Wikipedia, in a sentence with no citation on it, says the holding company i-21 Holdings went into administration during the 2001 telecoms collapse and that Interoute was restructured rather than wound up, with a team under James Kinsella selling off the traditional telephony side to concentrate on network and internet services. The Daily Telegraph put the debt at £310 million in November 2002.

Surviving that was the whole achievement, because the comparison set did not. Ebone went through KPNQwest's receivers and Interoute bought part of it in July 2002 for what Light Reading called a fraction of the €645 million KPNQwest had paid. PSINet's European operations in five countries came the same way. So did the European arm of VIA NET.WORKS, and a Central European carrier group with subsidiaries from Prague to Bucharest. A network assembled this way is a map of other people's bankruptcies.

By the time GTT Communications announced the purchase on 26 February 2018, the assembled thing was large. GTT's own press release counts it: 72,000 kilometers of fiber, over 400 points of presence, 24 metro areas, 126 cities, 29 countries, 15 data centers, 17 virtual data centers and 51 colocation facilities, plus connections into more than 195 third-party data centers. Revenue was €718 million for the twelve months to 30 September 2017, against €165 million of adjusted EBITDA. The price was approximately €1.9 billion, or $2.3 billion, in cash.

~ the case file ~

~ who was selling ~

The seller list is the part that explains how a fiber company lived through the bust. GTT names the shareholders in the announcement: the Sandoz Family Foundation, Aleph Capital and Crestview Partners. A Swiss family foundation built on pharmaceutical money is exactly the kind of owner that can hold an asset through a decade in which it earns nothing. The public markets of 2002 could not. Gareth Williams, Interoute's chief executive, got the quote about an exciting next chapter. Rick Calder of GTT got the one about connecting people across organizations and around the world.

~ the leverage ~

GTT paid cash it did not have, and said so in the open. The announcement describes committed debt financing from a group of financial institutions plus $250 million of committed equity from its largest institutional investor, The Spruce House Partnership, and from Acacia Partners. It then states the arithmetic that matters: total net debt to adjusted EBITDA of approximately 5.0 to 5.5 times at closing, against a long-term target range of 3.0 to 4.0 times. Calder promised integration inside three to four quarters and a post-synergy multiple of seven to eight times or better.

The deal closed on 31 May 2018, three months after it was announced and inside the three-to-six-month window GTT had given itself. The completion release names no price and no network figures. It is a page of adjectives.

~ what the buyer did with it ~

GTT never got the leverage down. On 16 September 2021 it closed the sale of its entire infrastructure division to I Squared Capital for $2.15 billion, and the buyers renamed the assets EXA Infrastructure. Forty-five days later, on 31 October 2021, GTT filed a prepackaged Chapter 11 petition in the Southern District of New York under case number 21-11880, aiming to cut about $2.8 billion of debt. The foreign operations stayed out of the filing.

So the fiber Interoute spent twenty-three years assembling was sold twice inside forty months and carries a third name now. interoute.com answers today with a hundred and fourteen bytes of javascript that bounces you to a parking lander. The cable is still in the ducts, still lit, still carrying whatever crosses Europe this afternoon, under a brand that did not exist when any of it was laid.

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