GTT Communications (GTT) - Get Report shares jumped Friday after the telecom carrier said it agreed to sell its fiber and data center infrastructure division to private equity firm I Squared Capital for up to $2.15 billion.
GTT is shifting its focus to cloud networking services.
Its shares at last check jumped to $5.39, up 7.6%. They have dropped 50% year to date amid stiff competition in the telecom industry.
The $2.15 billion sale price includes a cash payment of $2.02 billion at closing and total deferred payments of up to $130 million based on certain financial results.
“The divestment of the highly differentiated infrastructure division assets will ensure greater focus on network investment and development of high-speed infrastructure services under the more specialized ownership of this experienced investor,” GTT's chief revenue officer and interim CEO, Ernie Ortega, said in a statement.
“The deal enables GTT to reinforce its cap-ex light business model as well as its cloud networking focus and will benefit both enterprise and infrastructure clients alike.”
GTT expects the sale to close during the first half of 2021.
In gaining the deal, I Squared topped efforts by other infrastructure players such as Macquarie Group, 3i Group and AustralianSuper, which had negotiated previously to purchase the assets at the same price, knowledgeable sources told Bloomberg.
“Digital infrastructure assets like optical fiber have been the focus of a flurry of deals as investors favor their reliable, long-term returns. The coronavirus pandemic has fueled demand as more people work, shop and socialize online,” the news service reported.