Infracapital has become the latest investment firm to secure a stake in the increasingly popular connectivity industry with a £380 million investment in SSE Enterprise Telecoms.
The deal will see Infracapital secure a 50% stake in the SSE Enterprise Telecoms business, with £215 million to be paid on completion of the transaction, the end of June, and up to £16 million in a series of instalments depending on the performance of the business in the future.
“Infracapital’s investment in SSE Enterprise Telecoms shows the confidence it has in the future growth of the business,” said Colin Sempill, SSE Enterprise Telecoms MD. “It recognises the success we have achieved to date, building out a great network, winning notable contracts and being relentlessly focused on customer satisfaction. Both parties see this as an opportunity to help develop the network infrastructure that this country needs to turn the vision of the UK’s digital economy into reality.”
“High-speed connectivity is vital to economic growth and prosperity and we are delighted to announce this partnership with SSE plc.,” said James Harraway, Infracapital Director. “SSE Enterprise Telecoms is an established telecoms infrastructure provider and is well positioned to support growth in this critical sector. Infracapital has considerable expertise of investing in digital infrastructure and we look forward to working closely with our new partners as the business continues to grow, deliver new projects and expand its networks.”
While SSE Enterprise Telecoms is not necessarily a heavyweight on the UK’s connectivity scene, this investment is just another example of financial firms becoming increasingly interested in alternative network providers, or Alt-nets. Hyperoptic is another example, having secured £250 million from eight international banks to extend its full fibre optic network, while CityFibre secured a debt package of £1.12 billion last month, after being bought by a Wall Street investment consortium in April.
More than anything else, this is an indication that perhaps things are not going as badly in the telecommunications as some would have you think. It might be going through a rocky time competing with the OTTs, regulations might not be going all the right directions and revenues are not growing at a rate of knots, but such investments show there is confidence in future success. The industry has demonstrated consumers are willing to pay for larger data bundles and fibre connectivity, and now the financial industry is listening more acutely.
For the Alt-nets and the consumer, it is a great sign. Securing more investments in the business, especially from those organizations which are not necessarily chasing the short-term pay out, will provide more security around CAPEX and deployment plans. It might not be the most exciting news from today, but it perhaps some of the most reassuring.