Enel spends €150m on Ufinet stake with potential €2bn future buyout clause

27 June 2018 | James Pearce

Enel has agreed to buy a 21% stake in Latin American fibre operator Ufinet as it looks to grow in the Latam ultra-broadband sector.

The multi-national power and telecoms company is one of Europe’s largest utility firms in terms of market cap, but it also operates fibre optic units, having bought Italy’s Metroweb in 2016.

Subsidiary Enel X spent €150 million to buy the 21% stake in Ufinet from owner Cinven, and the company also has an option to buy the rest for up to €2.1 billion. This option will be available between 31 December 2020 and 31 December 2021 and is dependent on unspecified KPIs.

Should Enel opt not to bid for the rest of Ufinet, which manages over 49,000km of fibre in 14 countries across Latin America, then Cinven – through the Sixth Cinven Fund – will have the right to offload its share in Ufinet, along with Enel’s stake in a "drag along" deal.

Enel already owns Endesa, which is one of the biggest utilities providers in Latin America, and is rolling out a nationwide fibre network through Open Fiber (owned with Italy’s state-owned CDP) to rival Sparkle-parent Telecom Italia.

Enel said it will fund the deal, which it expects to close in July, through its own funds, making the acquisition to speed up growth in the Latam fibre sector. Ufinet International runs 17,000km of its fibre in metropolitan areas and supports a number of multinational telecoms groups. It operates link across Latin America and into the Unites States, as well as running services in Spain connecting to London and Frankfurt.

The firm has a backlog of long-term contracts worth around €700 million and generated revenue of €159 million in 2017. 

"Our positive momentum in Latin America continues with the acquisition of Ufinet International," said Francesco Starace, CEO and general manager of Enel. "Following the successful completion of the reorganisation of our businesses in Chile earlier this year, and the recent acquisition of Eletropaulo, this deal further strengthens our position as a leading infrastructure operator in the region. 

"Enel X will benefit from our experience in Italy through the Open Fiber joint venture to develop wholesale ultra-broadband services in synergy with the distribution grids that we operate in the largest metropolitan centres in Latin America, where the demand for connectivity is seeing rapid growth."

Topics: Enel, Ufinet, mergers and acqusitions, latin america, Latam, Metroweb