Private equity firm acquires Spain's Gas Natural Fenosa Telecomunicaciones

British private equity firm Cinven has agreed a deal to acquire the telecommunications operations from Spanish utility company Gas Natural Fenosa (GNF) for a total consideration of €510 million ($690 million).

Gas Natural Fenosa Telecomunicaciones (GNFT) is a fiber-optic network operator in Spain and Latin America. As a neutral telecom operator, GNFT provides fiber-optic infrastructure and high-speed network services to any telecom operators in Spain and Latin America over the utility network infrastructure.

GNFT also provides telecommunication services to the parent company and will continue providing those services to GNF after the deal has closed.

Cinven's TMT and Spanish teams said they regard GNFT as an attractive investment because of the company’s strong financial track record and market opportunity in Latin America where markets are developing and fiber-optic connectivity and capacity demand is increasing fast. GNFT reported a 13% EBITDA increase (combined annual growth rate) between 2011 and 2013.

"The principal growth drivers for broadband globally are cloud computing, high speed fixed and mobile access and data explosion. These are driving increased demands for broadband capacity and, as a result, greater investment in fiber-optic networks. Neutral carriers, like GNFT, are well positioned to capitalize on this explosion in capacity demand. We also believe there is considerable potential for GNFT as an independent business under our ownership given its strong business fundamentals," said Thomas Railhac, principal at Cinven.

"GNFT is a well-invested fiber business in Spain with strong cash flow generation,” said Jorge Quemada, partner at Cinven. “The company also has exposure to high growth markets in Central and South America. GNFT has an excellent management team with a significant track record in the telecom industry with a combined 86 years in the sector and we look forward to working with them.

Quemada also noted that Cinven have invested successfully in telecom businesses such as Ziggo in the Netherlands and Numericable in France in the past and believes this experience will be of considerable benefit to GNFT.

The management will be led by Iňigo García del Cerro, who will continue in his role as managing director of GNFT.

For more information on high-speed transmission systems and suppliers, visit the Lightwave Buyer’s Guide.