In a surprise announcement after the market closed, tndm says it has agreed to acquire Tinet, the international wholesale provider of IP transit and Ethernet services. The purchase price is approximately €87.5M ($111.5M), of which €74.5M will be in cash and €13M will be in the assumption of debt net of cash. That’s a pretty nice return for the investors that took Tinet off Tiscali’s hands a year and a half ago for €47M or so, but Tinet has been growing quite well since. After closing, Tinet will become a subsidiary of Neutral Tandem, which seems to be metamorphosing before our eyes.
As its name suggests, Neutral Tandem mostly operates neutral tandem switches for voice and voip connections, but they do operate an MPLS network as part of that business. This year of course, they dove into the budding Ethernet Exchange market. But by buying Tinet, they quickly move much deeper into the world of wholesale IP and Ethernet services and become… what? I’m not quite sure yet. How does an Ethernet exchange fit as part of an internet backbone? And those tandem switches – they’re still ‘neutral’ in that Tinet doesn’t do voice, but it’s not quite the same thing.
I will be interested to see where they take this combination of voice, Ethernet, and IP Transit. Sounds a bit like a carrier, perhaps an overall name change is in the wind sometime if they integrate the assets tightly. What they don’t have yet is fiber, though Tinet was getting along just fine on leased waves. The purchase will be financed from Neutral Tandem’s cash on hand, they have some $186M on the books and no debt. That would seem to leave them some further M&A flexibility, might they have some other targets in mind?
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