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MegaPaths Surprise Move: Provider Sells Managed Services Unit

**Editor’s Note: Please click here for a recap of the biggest channel-impacting mergers in Q4 2014.**

MegaPath, a service provider that for years billed itself as a managed services provider, made a surprise announcement late Thursday: It has sold its managed services business to GTT Communications.

The deal comes a few months after MegaPath sold its network services unit to Global Capacity. With both transactions, MegaPath says it intends to focus instead on UC and the cloud. The company last year started offering UC when it teamed with CounterPath.

Because MegaPath is privately held, it’s not possible to track the company’s financials; however, divesting itself of a key, strategic group seems to indicate that said group was not generating the necessary revenue. Along those lines, GTT said it will pay $144.8 million in cash and $7.5 million in common stock for the MegaPath property. That’s a big number, although not as big as might be expected of a division that claims to serve more than 500 large enterprise clients.  

Now, MegaPath says it will use the proceeds of this latest sale to drive UC and cloud services revenue. The company has stayed channel-friendly with executives such as Dan Foster at the helm, so there’s little reason to think this new direction should hurt partners.

It’s also useful to know that MegaPath said it will use GTT to deliver the connectivity required to support those platforms, and that the partnership will allow it to sell more high-capacity services at “competitive” prices. That could bode well for partners vying for cost-conscious customers.

GTT and MegaPath expect to close their deal on April 1.


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