Investors line up for Partner's fibre network

Investors appear to be queuing up for a slice of Partner Communications’ fibre network business.

The Israeli operator revealed that it has received bids from “various investors” keen to acquire a 20% stake in its fibre access networks business. The company said it is currently considering the unspecified number of bids it has received, noting that offers have come in at north of 550 million shekels (around US$168 million).

Partner declined to comment further at this stage, but pledged to share more details if and when it gets to the point of binding offers and progress towards a transaction. It added the usual caveats about there being no certainty a transaction will ensue, nor that any such transaction would pass regulatory scrutiny.

Partner first shared its desire to bring in outside investment in the fibre space in November last year. It explained that it was mulling allowing an investment partner or partners “to acquire up to 20% of the rights to use the Company’s existing and future fiber optic network for services to private households. These rights will be transferred from the Company to a newly-formed partnership, and the Company will then sell up to a 20% stake in this new entity.”

That’s a long-winded way of saying it was looking to spin off its fibre assets and flog a 20% stake.

According to Globes, a flotation could also be in the offing.

The news outlet this weekend named Israel-based private equity firm Generation Capital as one of the candidates to buy into Partner’s fibre assets.

Bringing in third-party investors will provide Partner with additional funding to speed up the rollout of its fibre infrastructure at a time when the market is starting to hot up…no pun intended.

Partner’s announcement comes just days after Globes reported that the government has given the go-ahead for rival operator Hot Telecom – whose parent company Altice tried to buy Partner last year, incidentally – to invest in IBC’s fibre venture Unlimited. That deal will lead to ownership of the venture being split between Hot, Cellcom and Israel Infrastructure Fund (each holding 23%), and Israel Electric Corporation.

As the paper put it: “The deal creates a new force in fiber-optics in Israel that will compete with [incumbent] Bezeq.”

Reading between the lines, that puts Partner in a tricky position, flying solo in the fibre space against some pretty serious competition.

It’s pretty clear why Partner needs a partner.