Polish cable operator INEA SA says it has received a strategic investment from an affiliate of Warburg Pincus, a global private equity firm focused on growth investing. The investment firm has committed additional funding for growth and consolidation, including planned roll out of fiber-to-the-home (FTTH) technology. Terms of the investment were not disclosed.
The funding will be used to support a major expansion of INEA’s next generation access (NGA) network, providing triple-play bundles and high-speed broadband access to homes and businesses across the region, as well as supporting consolidation of the sector.
Since its foundation in 1992, INEA has grown into the fourth-largest cable operator in Poland and claims it is the leading triple-play operator in the Wielkopolska region. Passing 360,000 homes and serving 170,000 subscribers, INEA provides telecommunications services over its fully upgraded network, including HotSpots throughout Poznan and its own local TV channel. Wielkopolska is the third-largest Polish province with a population of 3.4 million. In 2012 the dompany generated revenues of PLN 169 million ($53 million).
The FTTH roll out will extend fiber-optic broadband access to over 200,000 additional households and a significant number of businesses in Wielkopolska. Part of the investment will be devoted to funding Wielkopolska Sieć Szerokopasmowa, a partnership with the local government that will construct over 4,000 km of fiber-optic backbone and distribution network, putting 95% of Wielkopolskie households within a 4-km radius from the closest distribution node. Once completed, INEA says its network will be the most advanced in Poland, providing high-speed broadband access to over 500,000 homes across the entire Wielkopolska region.
In addition, the investment by Warburg Pincus will support INEA’s ability to consolidate the highly fragmented local cable market.
Janusz Kosinski, president of the management board and co-founder, commented, “Warburg Pincus is a very experienced and successful investor who fully supports the project to construct the next-generation access network in the Wielkopolska Region. Since we engaged in the project to construct a NGA network we have been looking for a partner who would allow us to complete this project on as large a scale as possible. The involvement of Warburg Pincus will help ensure the success of this project which will lead to all inhabitants throughout the Wielkopolska Region benefitting from access to next-generation broadband telecommunication services. In addition, with the support of Warburg Pincus, we will have more opportunities to grow our business further.”
Warburg Pincus has significant experience as an investor in the cable industry, having formed Ziggo (ZIGGO NA), the largest cable company in the Netherlands, through the merger of three smaller regional cable companies, Multikabel, Casema, and @ Home. Warburg Pincus has also invested in cable operators in the United States, the United Kingdom, and several Central and Eastern European markets.
Paul Best, a Warburg Pincus Managing Director, commented, “The Polish TV and broadband markets benefit from long-term structural growth and cable has a significant advantage over other technologies. We were attracted to INEA due to its strong market position and the potential for further growth and industry consolidation.”
The transaction is believed to be the largest private equity investment in Poland this year.
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