Cordiant Digital Infrastructure today announced two separate acquisitions, being Ceské Radiokomunikace (CRA) in the Czech Republic, from funds of Macquarie, and an undisclosed long-haul fiber optic network based in Norway. In aggregate, Cordiant Digital Infrastructure is acquiring the businesses for total consideration of £451m, comprised of £318m of equity and £133m of debt. Overall, the two businesses generated £40.5m of EBITDA for full-year 2020E, equating to a valuation multiple of 11.1x EBITDA.
Following completion of the transactions, Cordiant Digital Infrastructure will have deployed the vast majority of the £370m of equity it raised through its initial public offering (IPO). Indeed, the firm will be left with dry powder of only £43.4m of equity to invest.
Ceské Radiokomunikace (CRA) – Czech Republic
Cordiant Digital Infrastructure today completed the acquisition of Ceské Radiokomunikace (CRA) in the Czech Republic from Macquarie European Infrastructure Fund II (MEIF2), Macquarie European Infrastructure Fund III (MEIF3), and Macquarie Mercer Infrastructure Trust.
Physical Assets
CRA’s digital infrastructure includes broadcast towers, wireless towers, a fiber backbone network, and the DC TOWER data center in Prague. Specifically, the company owns 660 telecommunications towers, including 86 television and 97 radio broadcasting sites, 3.0k microwave connections, and 2.3k miles (3.7k kilometers) of fiber. Additionally, CRA’s data center offering extends further through various points-of-presence (PoPs) throughout the Czech Republic.
Strategy
CRA will support Czech Republic wireless carriers in their roll-out of 5G, through its tower infrastructure. Additionally, Cordiant Digital Infrastructure intends to expand the size and reach of CRA’s data center business in the Czech Republic.
Competition
In the Czech Republic, two of the major tower infrastructure operators include CETIN (4.8k sites) and Vantage Towers (3.8k sites). Notably, Vantage Towers has a low, 1.1x tenancy ratio, on its towers in the Czech Republic, which is primarily Vodafone. Therefore, Vantage Towers will likely pose competition to Cordiant’s CRA for incremental tower lease-up in the Czech Republic.
Dark Fiber Network in Norway
Cordiant Digital Infrastructure today entered into a binding letter of intent (LOI) to acquire a 700-mile (1.1k kilometer) long-haul (inter-city) fiber network in Norway and land for data center development. Specifically, the dark fiber network connects regions of Norway with population centers in Denmark, Sweden, and other major European cities.
Customers of the fiber network include telecommunications operators, industrial companies, and utilities that have signed long-term contracts. However, only ~50% of the network’s fiber capacity has currently been leased, offering significant potential lease-up opportunity. Indeed, this lease-up could come from existing customers or new customers, such as data centers that need fiber optic capacity.
Data Center Land Parcels – Norway
Cordiant Digital Infrastructure has also signed an agreement to invest in land parcels in Norway with substantial power availability. In so doing, the firm will begin to build-out a data center business in Norway through development of the sites.
Overall, Norway (and Scandinavia) is a region in Europe with low-cost, environmentally friendly, and abundant electrical power. In turn, these characteristics make it an attractive investment destination for Cordiant Digital Infrastructure.
Including the data center acquired in the Czech Republic, Cordiant Digital Infrastructure’s current plans contemplate having a portfolio of 6 edge data centers, once all the facilities are fully built-out.
