GlobalConnect Group, a fiber provider and data center operator in the Nordics backed by EQT Infrastructure, today announced that it has agreed to acquire fiber assets in Sweden from Telenor, including the wholesale operator Open Universe and Telenor Sweden’s single-dwelling unit (SDU) fiber-to-the-home (FTTH) assets.

GlobalConnect is acquiring these fiber assets from Telenor for a purchase price of $330m USD (SEK 3 billion). In 2020, the fiber operations generated EBITDA of $26.4m USD (SEK 240 million), which implies a valuation multiple of 12.5x EBITDA. Additionally, Telenor notes that the divestiture will result in a pre-tax gain of $187m USD (SEK 1.7 billion) for the company.

Finally, the transaction is expected to close in Q1 2022.

GlobalConnect Scales in Sweden with Telenor Deal

During 2020, GlobalConnect’s Sweden operating region produced revenue of €230m ($282m USD) and adjusted EBITDA of €132m ($162m USD), equating to a margin of 57%. Also, during 2020, GlobalConnect made capital expenditure investments in Sweden of €329m ($404m USD), equivalent to 68% of the company’s total spend.

GlobalConnect’s deal with Telenor further scales the company as a leading fiber operator in Sweden. Below are details on the two units that GlobalConnect is acquiring, namely Open Universe and Telenor Sweden’s SDU fiber assets.

Open Universe

Open Universe builds and operates an open access wholesale fiber network. As such, the company’s network provides broadband access to internet service providers (ISPs) and carriers through lease agreements. For example, Nordic operators including Telia, Tele2, Telenor, and Bahnhof all utilize Open Universe’s network.

Open Universe operates its open fiber networks in municipalities throughout Sweden connecting both apartment buildings and single-family homes. Presently, Open Universe’s fiber network connects to 200k households in Sweden.

GlobalConnect will operate Open Universe independently, maintaining the unit’s brand name and operating model. Additionally, GlobalConnect will invest in Open Universe to deliver more businesses and households across Sweden with fiber-based broadband services.

SDU Fiber Assets

GlobalConnect will incorporate Telenor Sweden’s SDU fiber-to-the-home (FTTH) infrastructure into its consumer operations in Sweden, under the IP-Only brand. Through the consumer-facing IP-Only, GlobalConnect builds and operates fiber networks for private households.

Presently, Telenor Sweden’s SDU assets have 14k residential fiber subscribers. These SDU fiber assets enable IP-Only to further expand and densify its network. In turn, GlobalConnect will offer fiber-based broadband to households that previously have not had service.

GlobalConnect – Northern Europe and Sweden

Across Denmark, Norway, Sweden, Germany, and Finland, GlobalConnect owns 58.2k miles (93.6k kilometers) of fiber network and 323k sqft (30.0k sqm) of data centers.

In Sweden, GlobalConnect serves 3.3k corporate customers and connects more than 335k households with its own fiber network. After integrating Telenor’s fiber businesses, GlobalConnect will increase its consumer connections to 535k total households in Sweden.

Telenor – Transaction Rationale

Following the separation of its fiber infrastructure, Telenor will operate by utilizing third-party networks. This transaction showcases the separation of capital-intensive assets from service companies (i.e., Telenor) and into infrastructure companies (i.e., GlobalConnect).

Strategically, Telenor will focus on developing products and services for customers in mobile, broadband, and television. Indeed, the company’s broadband offering is not dependent on Telenor owning a communications operator or building-out its own residential fiber.

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