An Altice-led team comprising three major infrastructure investors has agreed to buy France’s fourth-largest fibre optic operator Covage for EUR 1bn, in a deal that could expand the consortium’s broadband network by almost 50%.
The SFR FttH joint venture comprising Dutch telecoms giant Altice (50%), OMERS Infrastructure (29.5%), Allianz Capital Partners (13.5%) and AXA IM (7.5%) has signed an exclusivity agreement to buy Covage from Cube Infrastucture Fund and Partners Group, according to sell-side and buy-side statements released on Monday (25 November).
The deal values Covage’s equity at EUR 1bn while the enterprise value including net debt is around EUR 1.2bn-EUR 1.3bn, according to a source close to the deal.
The deal implies an EV/EBITDA multiple of between 40 and 50 times, given Covage’s EBITDA of EUR 26.5m last year and around EUR 30m expected for 2019, added the source.
However, according to a second source close, the price was agreed based on future growth projections, as three quarters of Covage’s fibre connections are contracted via concessions but are yet to be built and don’t generate EBITDA yet.