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Eir sells half its fibre network

Irish telco Eir has completed a deal to sell a shade under half of its fibre broadband network to investor InfraVia, a move that will help it to fund its rollout plans.

And there’s a rumour it could provide a hefty payout for shareholders too.

The Irish incumbent has wrapped up the deal it announced in January to create a new subsidiary, known as Fibre Networks Ireland Limited, and hand a 49.99% stake in it to European private equity firm InfraVia Capital Partners.

The companies have not been particularly forthcoming about the finances, but we know that as a result of the deal, Fibre Networks Ireland has obtained €765 million in dedicated financing, “at improved terms to Eir’s current debt,” Eir revealed.

Earlier this year The Times reported that the deal would also result in a hefty dividend for Eir’s backers, which notably include telecoms entrepreneur Xavier Niel. The French businessman bought into Eir in 2018 and remains its largest shareholder via both his NJJ Telecom Europe business and telco Iliad. According to the UK newspaper, Niel could pick up a dividend in the hundred of millions of euros; the deal would release north of €1 billion, some of which would pay down debt, while shareholders would also take a big payout, the paper said.

Admittedly, it quoted an Eir spokesperson as saying there were “currently” no plans for a distribution to shareholders, and we haven’t heard much about it since. There is certainly no such information in Eir’s latest announcement. But it’s probably wise not to bet against such an outcome.

Moving away from speculation, what we do know is that the transaction will drive Eir’s fibre broadband rollout.

To backtrack a little, the Irish operator was something of a laggard in fibre until Niel’s takeover five years ago. An FTTH push ensued, but there is still more work to be done in extending fibre-to-the-premises coverage in Ireland, both for Eir and its rivals, as well as boosting uptake.

As of the end of the first quarter of this year there were 401,868 FTTP subscriptions in Ireland, an increase of 42.5% year-on-year, out of a total of 1.59 million fixed broadband subscriptions, according to regulator ComReg. Vodafone is the market leader on the retail front, with 36.5% of connections, followed by Eir with 30.9%; both appear to be being outpaced in growth terms by third-placed Sky, whose share has increased to 17.6%.

Eir clearly needs to work on signing up retail customers as much as it does extending network reach. But the latter should also help with the former. And the InfraVia deal will be instrumental.

“The investment arising from this transaction will allow Eir to increase the pace of expansion of its fibre-to-the-home broadband network,” Eir said, in a statement. “On completion this network will serve 84% of homes and businesses in the country, meaning Ireland is on the way to becoming one of the most fibre connected countries in the world.”

Not before time, you could argue. The FTTH Council Europe’s ranking puts Ireland’s FTTH/B coverage at nearly 61%, which is above the European average, but only just, and still some way behind leading markets like Latvia and Spain, both of which are pushing 90%.

Back in January Eir said it aimed to pass 200,000 homes this year, increasing to 250,000 in 2023, with its total rollout reaching 1.9 million by end-2026. It needs to crack on with the digging.

 

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