Telenor divested its multibillion-dollar passive fiber infrastructure business and signed an agreement to sell a 30 percent stake to an investment consortium that includes KKR.
The investment group, which also includes Norwegian life insurance company Oslo Pensjonsforsikring, has agreed to a deal that values the entire business at 36.1 billion kroner ($3.4 billion). As a result, Telenor received about NOK 10.8 billion, or more than $1 billion in proceeds.
Telenor says a significant portion of that will be used for share buybacks; about 30 percent, to be more precise. But that still leaves Telenor with a reasonable amount of change in the deal.
That's certainly why Telenor and its peers elsewhere in the industry are entering into agreements like this, enabling them to monetize their passive infrastructure. Towers deals may be more common, but investors also like fiber, and there is no shortage of such arrangements in the global industry.
In fact, last week Spanish media reported that Vodafone had hired a consultant to help it explore selling a stake in its fixed network. The telco is working with investment bank Evercore on its options, which could include selling a majority or minority stake in its fixed infrastructure to attract private equity.
But back to Norway. Telenor says it will maintain control of its fiber assets, retaining a 70 percent stake in them, and has written into the contract a right of first refusal in case KKR and others choose to sell at some point in the future. In addition, if Telenor chooses not to exercise that right, the Norwegian government could step in to buy the shares, a way of dealing with the national interest issues that often come up with the sale of strategic or potentially sensitive assets.
Telenor Group CFO Tone Hegland Bachke said, "This transaction underscores the value of our infrastructure and frees up capital to support the continued rollout of high fiber in Norway, and we are attracting strong investors with a long-term perspective." The comments echo the rationale behind all such deals.
Neither Telenor nor the investors commented specifically on how the deal might affect the pace of fiber deployment or the amount of capital invested. But, as you might expect, all parties are making the right noises about infrastructure investment.
"We are pleased to be investing long-term capital in Norwegian infrastructure. KKR has extensive experience in telecom infrastructure investments and we look forward to supporting Telenor's fiber strategy in Norway," said Julian Barratt-Due, Director of Infrastructure, KKR Europe.
The transaction is scheduled to close early next year.
