North America: Fiber infra business engages banks to run sale process

15 August 2018 - 12:00 am UTC

Court Square Capital has engaged Evercore Partners and TD Securities to sell fiber network business Conterra Networks, said four sources briefed on the situation.

The Charlotte-based business has 11,100 fiber route miles clustered in the Southeast, South Central and in the Western part of the US. It is generating USD 50m in run-rate adjusted EBITDA from USD 105m of run-rate revenue, those sources said. The company has achieved annual fiber revenue growth of over 27% since 2014.

Teasers have been distributed to potential buyers and the process is still in the early stages, it is understood.

The sale comes at a time when the market has been highly competitive for telecoms assets. This year, funds like Antin Infrastructure, AMP Capital, EQT and Brookfield have bought assets in this sector for EBITDA multiples in the high teens, in some cases exceeding 20x EBITDA, said a fifth and sixth source.

While telecoms assets lack the longer-term concessions that traditional infrastructure assets like roads and bridges tend to have, they offer offtake agreements in the 5-to-20-year range in a prolonged growth market for data demand.

Court Square Capital acquired Conterra in 2014 and has since used it as a platform for bolt-on acquisitions, including this April’s buyout of fiber optic network service companies Network USA LLC and Sun American Communications LLC. 

As reported by InframationConterra has also participated in the E-Rate program, which provides federally subsidized broadband to schools, libraries and rural hospitals.

Separately, Court Square Capital recently filed a Form D with the SEC for its fourth buyout fund.

Court Square and Conterra did not return calls seeking comment. Evercore and TD Securities declined comment on the situation.