GTT buys former Yipes for just $28m
GTT picks up customer base of Yipes from Reliance Globalcom for one-tenth what Reliance paid for the network in 2007
GTT has bought the customer base of Ethernet-based carrier formerly called Yipes from Indian operator Reliance Communications for $28 million – less than a tenth the $300 million cost for which Reliance bought the Yipes network nine years ago. Reliance sold the unit after valuing the operation at zero.
Reliance Communications released details about the sale but the deal has not yet been officially confirmed by GTT. However a person close to GTT confirmed that a report would be released through the US Securities and Exchange Commission (SEC) shortly. The former Yipes has “a fairly impressive network”, the person said.
Reliance Communications bought Yipes from its venture capital owners as part of a wide-ranging expansion beyond India, which had already seen it buy Flag Telecom for $200 million and then UK-based Vanco – then being restructured – for $77 million. More recently Reliance Communications renamed the business Global Cloud Xchange.
John Scanlon, CEO of Yipes at the time of Reliance’s purchase, is now CEO of 365 Data Centers in California. Former CTO Kamran Sistanizadeh went on to become CTO of Reliance Globalcom after the takeover, but is now VP of networking at Google.
Reliance Communications released the information about the former Yipes in notifications to the National Stock Exchange of India in Mumbai that it had set up a Delaware-registered subsidiary called Onyx NewCo out of its Ethernet business division and then sold the new unit to GTT just days later.
“Ethernet division contributed revenue of $38.97 million, which represents 1.2% of consolidated revenue during FY 2015-16 and net worth of USD nil,” said the filing.
Yipes was an early pioneer of Ethernet communications. It was refinanced following the dotcom crash but in 2005 Sistanizadeh said the company was growing rapidly and forming international links. When he was director of network systems engineering at Bell Atlantic – the company that became Verizon he was one of the original team that developed ADSL technology.