Read this article to learn:
- What FPS has to offer to different classes of bidder
- Which bidders have announced their interest in FPS
- Potential synergies with towerco buyers
- Why FPS represents a great opportunity for infrastructure investors
Who has announced they’re bidding?
3i, through UK asset Wireless Infrastructure Group (WIG), has bid as part of their strategy to build a European mid-market tower platform driven by entrepreneurial local management teams. Supported by 3i and their other institutional shareholder, Barings Asset Management, WIG’s proposition would allow the highly entrepreneurial FPS team to retain a high level of autonomy over the business they have built to date.
Ideologically, the two organisations both share an entrepreneurial spirit and a willingness to explore new opportunities in their respective markets, with WIG heavily focussed on small cell opportunities in their key markets. WIG currently owns 2,000 towers in the UK, Ireland and the Netherlands, meaning FPS would be very much WIG’s equal partners in terms of tower numbers and experience. A combined towerco platform with 4,482 towers in total would see a small jump on the TowerXchange global towerco rankings (from positions 52 (WIG) and 47 (FPS), to 42nd overall) but would position them as a top 15 European player and could prove a concept for a new model of towerco cooperation in Europe.
Cellnex were quick to herald their €80mn acquisition of 230 towers from Bouygues Telecom (with a further 270 potentially to follow) as the beginning of a 20 year collaboration between the two companies. Bouygues is the anchor tenant on most of the FPS Towers, and one cannot escape the thought that Cellnex’s acquisition of 1% of France’s towers, per the announced Bouygues deal, is only the first step on a road to achieving a double digit market share. Cellnex pack a hefty punch in tower auctions, and will be strongly motivated to supplement their presence in France through the acquisition of FPS, whose talented management team would also give Cellnex an excellent local market leadership team, as well as the opportunity to cross-pollinate ideas.
Cellnex’s acquisition of UK’s Shere Group, a move designed to consolidate their position in the Dutch market alongside the 261 assets acquired from Protelindo in May 2016, also backs up their intention to move into and strengthen their position in Northern Europe. With an acquisition budget bolstered by a successful IPO, a €3.8bn market cap and over 18,500 sites, Cellnex closed Q116 with revenue of €165mn (+41%) and EBITDA of €63mn (+26%).
Other potential towerco buyers
One company likely to bid is incumbent French tower market leader TDF. When TDF refinanced in March 2015, valuing the company at €3.8bn, the new shareholders (Brookfield, APG, PSP, Arcus Infrastructure and Credit Agricole subsidiary Predica) injected €2.2bn in equity into the business. TDF turned over €735mn in FY15, with adjusted EBITDA of €381mn, good for a 52% margin.
The other likely towerco buyers come from across the pond – as the European market hots up, parallels with the US market and a steady rate of growth are attracting the interest of the publicly listed US towercos. SBA and Digital Bridge are believed to have an appetite for European towers at the moment, and although Crown Castle has been more focused on their domestic market in recent years, don’t discount the possibility of the company returning to Europe. American Tower, who have been linked to several European deals in the past, including the WIND towers in Italy, have recently agreed a joint venture with Dutch pension fund manager PGGM, called ATC Europe, with the intention of pursuing telecommunications real estate opportunities in select countries in Europe. Although we don’t as yet know which market they are targeting, this joint venture suggests American Tower will have increased clout and motivation to explore new European deals.
As an entrepreneurial towerco with an experienced and successful management team on board, FPS presents a plug-and-play towerco opportunity for an institutional investor interested in enhancing their portfolio in Europe. Big players in the European and global market who could have the interest and capacity for this acquisition include Macquarie, F2i, Providence Equity Partners, KKR, Ashmore, Berkshire, and Blackstone.
With European towers hotting up, a proven portfolio like FPS has increasing pull for global tower investors and a list of ten interested parties is testament to the acceleration in the market.