Partners Group, a private markets investment manager, through its Private Infrastructure group, today announced an agreement to acquire a 75% equity stake in EOLO SpA, an Italian fixed wireless access (FWA) broadband provider, at an enterprise value of €1.2bn+, from Searchlight Capital Partners and Cometa SpA, a vehicle controlled by Luca Spada (EOLO’s founder and CEO).

Prior to today’s announcement, Luca Spada’s Cometa SpA owned 51% of EOLO and Searchlight Capital Partners EPC UK Limited owned the remaining 49% of the company. Following completion of Partners Group’s 75% equity stake purchase, the remaining 25% of EOLO’s equity will continue to be owned by Luca Spada.

For the year ended March 31, 2021, EOLO generated revenues of €187m and pro forma EBITDAaL (EBITDA after leases) of €95m, equating to a 50.8% margin. In turn, this implies that Partners Group is valuing EOLO at EV/EBITDAaL multiple of 12.6x.

EOLO – Acquired by Partners Group

EOLO primarily operates in the residential market, providing more than 10 million households across Central and Northern Italy with its broadband services. The majority of these households tend to be in less-densely populated towns and cities, with populations of under 10k inhabitants. Currently, EOLO’s internet subscribers total 600k+ households and businesses.

Digital Infrastructure

EOLO owns and operates both passive an active digital infrastructure to run its broadband network, which includes:

  • Base Transceiver Station (BTS): 3.4k units which transmit fixed wireless internet between its network and end users. EOLO has recently been growing its BTS units by ~200 sites per year. Often the company executes this roll-out by placing its equipment on the towers of Italian tower companies, such as INWIT
  • Fiber Backhaul: 8.1k route miles (13.0k route kilometers) of fiber optic backbone network, covering ~80% of Italian households
  • Spectrum: licensed frequencies comprising 224 MHz of spectrum depth in the 28 GHz band. Additionally, EOLO provides fixed wireless access using the unlicensed 5.4 GHz band

Importantly, EOLO’s fixed wireless access (FWA) network is a capital-light way for Partners Group to invest in the broadband theme, because of FWA’s low roll-out cost and ease of deployment. Indeed, the company’s BTS equipment only requires a line-of-sight from a tower to a household in order to operate.

Value Proposition

EOLO’s fixed wireless access (FWA) network is theoretically capable of delivering speeds of 1 gigabit per second. However, the majority of the company’s subscribers access speed tiers between 30 to 100 megabits per second.

Therefore, EOLO’s services are often comparable or superior to other broadband offerings (e.g., DSL) that are available in rural and semi-urban towns and cities of Italy. At the same time, EOLO’s fixed wireless access (FWA) offering is inferior to fiber-based internet service, which is more urban-centric.

Competitors

TIM (Telecom Italia) is the largest internet service provider (ISP) in Italy, followed by Fastweb, Vodafone Italia, Wind Tre and others including BT Italia, Clouditalia, and Linkem.

Notably, Fastweb and Linkem have an agreement in-place to share resources and co-invest in their fixed wireless access (FWA) networks. Specifically, by 2024, the partnership intends to cover 12 million households in Italy with fixed wireless access (FWA), offering speeds of up to 1 gigabit per second.

Partners Group – Strategy Post-Acquisition

Partners Group will strengthen the competitive position of EOLO by funding €850m of total investment into the company by 2025. Specifically, Partners Group will focus its capital on three main areas of EOLO’s business:

  • Densification: strengthening EOLO’s fixed wireless access (FWA) network coverage, which uses high-band (millimeter wave) radio frequencies
  • Wholesale: development of the company’s wholesale customer base. Indeed, this builds on recent partnerships with Wind Tre and TIM (Telecom Italia). Specifically, these carriers have wholesale access on EOLO’s fixed wireless access (FWA) networks
  • Europe: Partners Group will scale EOLO’s business to offer broadband, via fixed wireless access (FWA), in additional countries in Europe

Overall, Partners Group has invested $2.4bn in digital infrastructure assets since inception. For example, Partners Group was formerly a shareholder in Covage, a French open-access fiber-to-the-home (FTTH) business.

Transaction Advisors – Searchlight Capital and Luca Spada

Searchlight Capital and Luca Spada used financial advisor Morgan Stanley to run the sale process for EOLO, which ultimately concluded with Partners Group as the acquirer. Additionally, Searchlight Capital’s legal advisor was Chiomenti. Finally, Luca Spada’s legal advisor was Clifford Chance.

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