Digital 9 reaches high by buying $454m Arqiva transmitter owner

Crystal Palace transmitter Arqiva.jpg

London-based infrastructure investor Digital 9 is to take over the Canada Pension Plan Investment Board’s 48% stake in UK transmitter owner Arqiva for C$585 million (US$454 million).

CPP Investments has owned the stake – the biggest in Arqiva – since 2009. But Arqiva’s portfolio does not include mobile telecoms towers, which it sold to Cellnex two years ago for £2 billion.

Among its operations are satellite TV distribution services and the 219m high Crystal Palace transmission mast (pictured) in south London, which delivers digital high-definition TV to around 11 million people.

Thor Johnsen, head of infrastructure investment at Digital 9, told Capacity this morning: “It’s a big business for us, with [prospects for] some good growth and cash return.”

Scott Lawrence, the head of infrastructure at CPP Investments, said: “Since the initial investment, CPP Investments supported the company in its operational and financial transformation to adapt to the dynamic nature of the UK’s digital and broadcast infrastructure and we are confident the business will be well supported by both its new and existing investors.”

The other shareholders in Arqiva are four Australian organisations: Macquarie with 25%, IFM Investors with 14.8%, Health Super Investment with 5.4% and the Motor Trades Association of Australia Superannuation Fund with 5.2%. “The Australians decided to stay in,” Johnsen told Capacity.

The acquisition, likely to be completed by the end of 2022, adds to Digital 9’s expanding portfolio of digital infrastructure, including subsea cable company Aqua Comms, data centre operator Verne Global, and fixed wireless company Host Ireland.

Arqiva runs 1,450 broadcast transmission sites, including Crystal Palace, across the UK, of which 1,150 carry TV services. It also delivers 1,100 TV channels by satellite worldwide.

But one of the attractions for Johnsen is the internet of things (IoT) business: Arqiva runs a smart meter network with “a national footprint” for utilities, said Johnsen.

Arqiva’s revenue in 2020 was £903 million, with £281 million operating profit, but this dropped in 2021 to £647 million, with £140 million operating profit, following the sale of the telecoms business to Cellnex.

Another contributing factor to the fall in revenue was the end of a campaign to end TV distribution on the 700MHz band, to make way for more mobile spectrum.

Arqiva chairman Mike Parton said after the Cellnex sale: “Arqiva has adapted and changed how we operate. The group has undergone a significant restructuring in the year in order to right size and focus on cost management for the smaller remaining business.”

At CPP Investments, Lawrence said: “With D9’s investment expertise in digital infrastructure, we feel they are well positioned to help deliver Arqiva’s ongoing strategy and ambitions.”

It is “a good complement to our existing portfolio”, Johnsen told Capacity. He said Digital 9 does not expect to try to return to the cellular sector.