HICL to acquire minority interest in French fibre-to-the-home platform, Altitude Infra
LONDON, UK: HICL Infrastructure Plc has entered into an agreement to acquire a minority equity position in Altitude’s fibre-to-the-home platform (Altitude Infra), investing alongside other InfraRed-managed funds and co-investors which, together with HICL, will own 15.1% of Altitude Infra.
Altitude Infra holds a controlling position in the largest independent wholesale fibre network in France, Altitude Infra THD. The Altitude Infra stake will be acquired from Altitude Group, which will retain a majority shareholding.
The investment is accretive to HICL’s key portfolio metrics, enhances portfolio diversification and improves the earnings profile of the Company. Following completion, the investment will represent approximately 2% of HICL’s portfolio, by value.
Altitude Infra is a leading owner/operator in the French fibre-to-the-home (“FTTH”) market, with a c. 30% market share of the fibre footprint in the Public Initiative Networks (PIN) areas.
It owns and operates 27 separate infrastructure networks awarded under the PIN scheme which together cover more than 5 million homes across France. Altitude Infra is the sole wholesale provider of FTTH fibre in its subsidised rural networks and has completed c.70% of its fibre roll-out target, with the remaining roll-out responsibilities shared between local authorities and Altitude Infra.
Management of the roll-out (where appropriate) and ongoing operations is delivered through Altitude Infra’s wholly owned project management and operations capabilities. The investment does not have any near-term refinancing risk.
France has an attractive market framework, underpinned by a national initiative to meet full FTTH rollout by 2025 and regulated by ARCEP, the French telecom regulator. Altitude Infra earns inflation-linked wholesale revenues generated from the sale of its broadband and network services to Internet Service Providers such as Free, Bouygues Telecom, Orange and SFR under an ARCEP tariff structure.
The investment will be funded by HICL’s £650m Revolving Credit Facility (“RCF”) with completion expected in Q2 2023.
In addition, the Company is in advanced negotiations to sell an existing investment and has granted a short period of exclusivity to a third-party bidder. The accretive disposal is expected to generate proceeds to materially fund the investment in Altitude Infra. Following completion of the disposal and the acquisitions of Altitude Infra and Texas Nevada Transmission (announced September 2022) the balance on HICL’s RCF is expected to be c. £400m.
Active portfolio rotation remains an important lever for HICL to enhance portfolio construction, and it provides both a valuable source of funding outside of financial markets and evidence of the robustness of HICL’s investment portfolio valuation.
Edward Hunt, Head of Core Income Funds at InfraRed said: “InfraRed is delighted to have added a second high-quality communications investment to HICL’s portfolio. The investment benefits from highly attractive core infrastructure attributes, with predictable inflation-linked revenues under a mature and regulated wholesale market framework. We are excited to be partnering with an operator of such high quality and strong market standing.”
HICL Infrastructure acquires 55% shareholding in ADTIM in France
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