Sunday, May 28

Avatel, the fifth fiber optic operator in Spain, is studying its sale for 1,500 million

Currently, Avatel is the fifth largest fiber optic operator in the country, has 400,000 customers and invoices more than 265 million euros.

The telecommunications company Avatel has become the new object of desire for investors. As reported by different financial sources to THE PERIODIC OF SPAIN, newspaper that belongs to this group, Prensa Ibérica, in recent months the company has received expressions of interest from different investors looking to enter capital and continue to develop their ambitious growth plan.

Currently, Avatel is the fifth largest fiber optic operator in the country, has 400,000 clients and invoice more than 265 million euros. The sources consulted indicate a valuation that could be placed at 1,500 million euros if the multiples that are being paid by other firms in the sector are taken into account. In any case, the same sources indicate that there is still no formal process launched and that the decision will be made at the end of the year with the closing numbers for the year on the table.

This newspaper contacted Avatel who argued that “for now there is no process in progress”, but just a month ago he did acknowledge that he was willing to bring a partner into his capital in a meeting with the press.

40 acquisitions in 2019

Founded just a decade ago on the Costa del Sol, the company has been growing progressively thanks to a strong commitment to consolidate the telecommunications sector, especially cbuying local operators from the rural worldl. In fact, this strategy implemented since 2017 has been the one that has made it take the exponential leap, in such a way that they closed 40 acquisitions in 2019.

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Figure that they hope to expand to reach 110 purchases for the period 2020-2021. In terms of gross operating profit (ebitda) the company will close this year with 123 million euros. In a meeting with the media last September, the CEO, Ignacio Aguirre, announced that they have identified up to 400 local operators that would suit them, focusing on those that provide their services to populations of between 5,000 and 30,000 real estate units.

At the moment, this ambitious strategy is financed through traditional entities, with a syndicated loan of 180 million euros formed by a pool of banks led by Santander. Previously, it had Andorra Telecom as a partner, which bought 37% of the Malaga company in 2017, but the founders bought back its share in December 2019. The entry of a financial investor would allow the company to grow to other areas of Spain, where it has not yet begun to provide service. Currently, its business niche is focused on the Mediterranean Coast, since the company was born in 2011 detecting the large number of second homes that were located in that area and the significant growth of the real estate business in the region.

This telecommunications company is one of the fastest growing in the sector, with some 30,000 portabilities per month, fully impacting the business of other traditional operators. For instance, Telefónica it has lost around 45,500 lines until September, Vodafone 22,200 and Orange 21,100. Some figures that attract attention if one takes into account the strong growth that others are experiencing, such as Avatel itself or MásMóvil, which has gained more than 47,000 lines of portability, or Digi (focused on the low-cost business). This has meant that the large telecommunications companies are redefining their strategy in order to maintain stable business growth in the coming years.

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The fiber boom

The consolidation of the telecommunications business is a reality throughout Europe, which for years speculates on the possibility of reducing the number of operators in the market. However, now the real investment fever is in the fiber optic industry, at a time when operators require large investments to increase their deployment of their networks and the race for 5G. For example, the French fund Ardian has just closed the acquisition of Adamo for 700 million, Red Eléctrica is looking for a partner to place 49% of Reintel, Antin Partners has just hired advisers to sell Lyntia (Naturgy’s old fiber business ), while Euskaltel remains on investors’ radar after having paralyzed the sale process with the MásMóvil takeover bid. However, many are confident that the crown jewel of the sector, the Telefónica network, in an operation that could be valued at 15,000 million euros.

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