PGGM, a Dutch pension fund, alongside EDF Invest, the real assets fund of the French energy group EDF, and other consortium members, today announced that they have agreed to acquire a 35% stake in the wholesale fiber business of Norlys, the largest integrated energy and telecommunications group in Denmark. Specifically, PGGM, investing out of its infrastructure fund, and EDF Invest, are both acquiring stakes in the fiber company Norlys Tele, which owns the largest fiber network in Denmark.

According to reports from Danish newspaper Børsen, the PGGM and EDF Invest consortium are paying more than DKK 8bn ($1.2bn USD) for their 35% stake in Norlys Tele. As such, Norlys Tele is being valued, on a whole company basis, at more than DKK 25bn ($3.75bn USD).

Norlys Tele – Fiber Company – PGGM and EDF Invest

Norlys Tele passes ~700k households with its fiber network, primarily in the mainland regions of Denmark, which is known as Jutland. Post-transaction, Norlys will maintain control of the operations of Norlys Tele and will work alongside co-owners, PGGM and EDF Invest, to continue building-out Norlys Tele’s fiber network.

Expansion

By the end of 2023, Norlys Tele has set a goal to pass a total of 1 million households in Denmark, implying an incremental 300k households passed. On average, Norlys Tele’s fiber build plan infers a pacing of ~13.5k households passed per month.

Geographically, Norlys Tele is expanding its fiber network on two of Denmark’s largest islands, known as Funen and Zealand.

Open Access Wholesale Fiber Network

Norlys Tele’s network is open to all internet service providers (ISPs) and carriers to offer broadband services to end users. Presently, Norlys Tele’s service provider partners include Yousee, Hiper, Telenor, Telia, and Stofa.

Partnership

Importantly, PGGM Infrastructure Fund and EDF Invest both have experience investing in fiber companies in European countries such as Germany, France, the Netherlands, and Belgium. For example, PGGM owns a minority stake in Eurofiber, a dark fiber provider in the Netherlands, Belgium, France, and Germany. While EDF Invest is a shareholder in Orange Concessions, a fiber-to-the-home (FTTH) business in rural France.

Norlys – Transaction Rationale

Norlys’ agreement to sell a 35% stake in Norlys Tele follows an 8-month auction process involving a large number of potential buyers. Strategically, Norlys will use proceeds from the minority stake sale in Norlys Tele for other corporate initiatives, which include a possible mobile acquisition.

At the same time, Norlys will reduce its share of the commitment to Norlys Tele’s future fiber builds across Denmark. As a reference point, Norlys has historically invested more than DKK 2bn ($300m USD) annually into its power grid, fiber infrastructure, and renewable energy sources (e.g., solar and wind).

Jonathan Kim covers Fiber for Dgtl Infra, including Zayo Group (private), Cogent Communications (NASDAQ: CCOI), Uniti Group (NASDAQ: UNIT), and Lumen Technologies (NYSE: LUMN). Within Fiber, Jonathan focuses on the sub-sectors of wholesale / dark fiber, enterprise fiber, fiber-to-the-home (FTTH), and subsea cables.

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