Bidders prepare indicative offers for DIF’s French fibre company

23 March 2022 - 12:15 pm UTC

DIF Capital Partners has requested indicative bids for a controlling stake in French fibre company ADTiM by the end of next week, with several bidders expected to show up given the absence of pre-emption rights from co-shareholders, sources said. DIF is planning to sell its entire 55% stake in ADTiM, a wholesale broadband network operator focusing on low-density areas in the Ardeche and Drome regions in France’s southeast. ADTIM’s co-shareholders are Caisse des Depots et Consignations (CDC) (30%) and Vauban Infrastructure Partners-backed Axione and Bouygues Energies & Services, which own the other 15%. Only CDC had a right of first offer (ROFO), but it formally waived it ahead of the sale process, according to sources. The deal is therefore not subject to any pre-emption rights from other shareholders. CDC also benefits from a tag-along right to sell its own shares, but it not expected to do so. Vauban IP is expected to be a contender in the process, given its massive expansion in the sector in recent years and its investment in Axione, which operates ADTiM’s networks, according to sources. Other likely bidders could include other French fibre operators such as Blackstone-backed Sipartech, Swiss Life AM and UBS AM’s Altitude, and XP Fibre, owned by Altice, OMERS Infrastructure, Allianz Capital Partners and AXA IM, which could see the deal as an add-on to their existing fibre networks, the sources added. Quaero Capital, which previously backed the Grand Est FTTH broadband PPP, and other infrastructure funds are also likely to assess the transaction. The asset could be valued at around EUR 200m, one of the sources familiar with the process said. ADTiM owns two fibre concessions in France’s southeast. One is a 25-year concession awarded in 2008 to operate a 2,300km network, which has been fully operational since 2011 and is held by ADTiM directly. The other one is a 19-year concession contract awarded in 2016 for 362,000 new FTTH connections, which is held by subsidiary ADTiM FTTH and is currently being rolled out. ADTiM’s concession generated EUR 7.8m of EBITDA in 2021, while ADTiM FTTH posted EUR 7.8m of EBITDA last year, according to sale documents seen by Inframation. The company’s consolidated EBITDA is expected to rise to circa EUR 35m for 2022 and remain high for the next few years, as ADTiM receives co-financing payments by telecoms operators that will use its network in the future under indefeasible right of use (IRU) contracts, before returning to drop below EUR 20m per years at the end of the 2020s. ADTIM currently has some EUR 76m of senior debt, which was raised at the time of DIF’s acquisition in 2017 from InfraVia. The debt includes a long-term facility, a capex revolving facility, and a debt service reserve facility, and matures in 2032. Despite the long maturity, the existing debt structure is considered sub-optimal and could be improved through a refinancing and the addition of a holdco acquisition debt package, according to the sale documents. Banks and institutional investors have already expressed interest in a potential refinancing. The contracts have scope for extension of their duration, with a likely extension to 2039 as a compensation for an initial construction delay. DIF, which launched the process earlier this year, is being advised by DC Advisory. DIF Core Infrastructure Fund I (DIF CIF I) bought the asset in 2017 from InfraVia, with equity and also debt provided by Societe Generale. DIF declined to comment on the deal. The potential bidders and the advisor did not respond to requests for comment. According to DIF’s website, the entire cost of the scheme was EUR 620m with the local authorities investing EUR 470m and ADTiM the remaining EUR 150m. The ADTiM project was part of the Tres Haut Debit government initiative to provide France with full fibre coverage by 2025. The EUR 20bn plan has involved some EUR 6bn from the private sector.