AlticeFrance has entered into an exclusive agreement with a consortium comprising Allianz Capital Partners, AXA Investment Managers – Real Assets and OMERS Infrastructure to sell a 49.99% stake in SFR FTTH in a deal that gives the latter an enterprise value of €3.6 billion.
SFR FTTH aims to pass five million homes with its network, including one million homes built out by the end of this year, with further homes to be franchised or acquired from third-parties. The company, which claims to be the largest FTTH infrastructure wholesale operator in France after Orange, has set a target of passing one million homes a year for each of the next four years.
SFR FTTH will sell wholesale services to operators at the same terms and conditions as it sells access to SFR, with no minimum volume commitments. Altice France will sell technical services to SFR FTTH for the construction, subscriber connection and maintenance of the network.
The company hailed the deal as the first of its type in Europe and said that it would lead to the creation of one of the biggest European wholesalers of FTTH.
The wholesale outfit will complement Altice France’s fibre-to-the-building network – the upgraded version of its HFC network – covering nine million homes and capable of delivering up to 1Gbps downstream, and its wholly-owned FTTH network, covering 2.5 million homes in major cities. In total, the company said, SFR will cover over 15 million homes with very high-speed networks, with plans to extend this reach further.
The deal is expected to close in the first half of next year.
Capital expenditure associated with the rollout will be covered by a €1.8 billion debt package to be deployed over the next four years off SFR’s balance sheet, thus further contributing significantly to a deleveraging of the company, which has been under pressure because of its level of indebtedness.
“I am very pleased that three of the most renowned infrastructure investors in the world are becoming our partners and committing large resources to build the leading FTTH wholesaler in Europe,” said Altice founder Patrick Drahi.
“With this transformational transaction and the various tower sales and partnerships announced earlier this year, Altice Europe has been able to crystallize €8 billion of infrastructure value and obtain cash proceeds of €4 billion in total in a few months. Through these transactions, Altice France and Altice Europe will deleverage and will have access to new and cheaper liquidity to invest in its fibre infrastructure. This transaction is creating huge value for our group, providing more fibre to our customers and more revenues and liquidities to our companies. Thanks to its fibre strategy, SFR will grow and deleverage from 2019.”
Altice had earlier announced that it was undertaking a strategic review of its fibre infrastructure, including “exploring financial partnerships”. In the company’s Q3 earnings call last week, CFO Malo Corbin said that the company was “extending this review to our fixed infrastructure in other countries in Europe”. Altice is also building fibre out in Portugal and Israel.
During the call, Drahi also said that he was “very open to sell a piece” of the SFR cable network, which he said would have to be upgraded to FTTH over time. Drahi said that the upgraded cable network could also be exploited for wholesale revenue in less densely populated areas, where the company could be “a good alternative” for third-party providers.
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22nd February 2020