Infracapital has agreed to buy a 50% stake in power group SSE’s telecoms arm for up to GBP 380m, the latest move by an infrastructure investor into the fibre sector.
Infracapital will pay GBP 215m for the stake in SSE Enterprise Telecoms on completion, expected by the end of June, and up to GBP 165m in instalments based on future performance.
SSE Enterprise Telecoms operates a 12,000km fibre network and data centres serving businesses and public sector organisations across the UK, including SSE Group. Infracapital said that SSE Group will remain a major funder and anchor customer of SSE Enterprise Telecoms.
SSE Enterprise Telecoms manages SSE’s internal call centre, telephony and data network infrastructure. The investment is understood to be Infracapital’s third through its Infracapital Partners III fund.
Infracapital, which is the infrastructure equity investment arm of M&G Prudential, the European savings and investments business of financial services group Prudential, already has investments in fibre networks including Gigaclear in the UK and the Digital Poland broadband programme. Infracapital in February signed a preliminary agreement with UK broadband provider TalkTalk to take an 80% interest in a hived off fibre business for up to GBP 500m. However, a final agreement has not yet been signed.
SSE Enterprise Telecoms will make a push into areas including 5G networks and smart cities following the investment, Infracapital said.
SSE said the sale of the stake is in line with its strategy to focus on its core energy business.
Infracapital also invests in utilities, transport, renewables and social infrastructure sectors.
Other investments in UK fibre providers by infrastructure funds this year include Antin Infrastructure and Goldman Sachs buying urban fibre network specialist City Fibre for GBP 538m and Aviva Investors acquisition of a minority stake in rural eastern England-focused County Broadband for GBP 46m.