Orange is studying the takeover of the TDF fiber network, valued at 1 billion euros

Posted Sep 7, 2023, 5:13 PMUpdated Sep 7, 2023, 5:34 PM

Selling by cutting, a new fad in telecoms? While Patrick Drahi now officially leaves the door open to dismantling of his empire, the TDF shareholders also resolve to sell a piece of it.

After several sales failures, its owners – Brookfield, PSP, APG and Predica – mandated BNP Paribas to part with its fiber network, one of TDF’s three activities along with “broadcast” (the broadcasting of television and radio, its historical profession) and telecom towers. Since 2017, the group has diversified into fiber with a small network of 750,000 sockets in five departments, to which it rents access to other operators.

A first round of bidding is scheduled for October, as Reuters reported this summer. Expected bet: around 1.5 billion euros. Contacted, TDF makes no comment.

Fiber, stable and long-term income

Originally, the decision to sell was not necessarily favored by TDF management, at the origin of this diversification promising. But the management would have finally lined up behind this arbitration, according to sources. Internally, however, some still do not approve of this project, while last year the fiber activity saw its growth jump by nearly 43%, to 52 million euros in turnover, or around 7 % of total.

A shareholder for almost ten years, Brookfield tried in the spring of 2022 to sell its 45% stake, hoping to value TDF nearly 8 billion euros – but the sale did not go through. Another attempt had also stumbled in 2019. After these two failures, “he now has to go back to the dividend to his own investors”, reports a connoisseur of the file.

Several candidates are in the running, but the expected value is nevertheless considered quite ambitious. “This represents a cost to take far too high”, estimates a source which evaluates the entity rather around the billion euros. “Today, a fiber optic socket is worth between 1,000 and 1,500 euros”, confirms a professional in the sector, and not 2,000 euros as expected by the shareholders.

But it is an opportunity that its competitors do not intend to p up. Especially since “investment funds are not going to rush to make an offer, because the entity alone does not have the critical size to generate a return very quickly. It takes m effect,” sources point out.

With 750,000 sockets, TDF is one of the smallest networks in the country. However, “it’s a very well-built, high-quality infrastructure. It makes sense for all the cast to watch,” a source explains. The bulk of the investments having ped (80% of the catches are finished and approximately 40% are marketed), the network will also begin to generate stable and long-term income.

Orange in rows

According to our information, Orange Concessions is in the running. “We will watch the subject carefully,” confirms the Orange subsidiary which deploys fiber in the countryside. In the last round of sale of TDF, the operator had already studied the redemption of 45% of Brookfield but without going to the end. The number one in fiber in France (35.5 million sockets) is none other than the former owner of TDF. Weighed down by a debt of 70 billion euros in the early 2000s, the historic operator had withdrawn from the group in 2005 for the benefit of foreign funds, for 1.85 billion euros.

Orange is not alone. Other candidates are in the running, according to these sources, such as Vauban Infra Fibre. It is allied with the operator Axione, which it co-owns at 49% with Bouygues, and together they total 6 million sockets under contract. Another contender, Altitude, with 5 million contracted sockets including 1 million connected households, which makes it the third largest infrastructure operator on the market. Contacted, the company declined to comment.

In any case, these three candidates are ured that another competitor will not overshadow them: XpFibre, the subsidiary of SFR which deploys fiber. At the telecom operator, which alone has almost 24 billion euros in debt, the priority is to reduce debt.

Source link

Leave a Reply