By Andres Gonzalez and Stephen Jewkes
MADRID – Europe’s biggest utility Enel is preparing to take full control of fibre optic network operator Ufinet by exercising an option to buy the 79% owned by private equity firm Cinven, three sources with knowledge of the matter said.
The sources cautioned a final decision on how the deal could be structured had not been taken.
Enel, which already owns 21% of the South American broadband operator, could pay up to 2.1 billion euros ($2.4 billion) for the majority stake it does not already own, the sources said.
Enel and Cinven declined to comment.
Broadband networks are attracting interest from investors as customers use ever more data and TV services via mobile and home devices, a trend that accelerated during coronavirus lockdowns.
Enel has previously said it is keen to replicate business experience in Italian full-fibre grid Open Fiber elsewhere in the world. It has agreed to sell most of the 50% stake it is selling in Open Fiber to Australian infrastructure fund Macquarie.
Last November, Enel CEO Francesco Starace said Macquarie could be a potential partner for Ufinet, among others possible candidates.
After clinching control of Ufinet, Enel plans to launch a process to find a buyer for up to 49% and use the money to finance further expansion, taking advantage of the high valuations for these assets, one of the sources said.
Enel, which controls Spanish utility Endesa, has extensive energy operations in Latin America and has launched a financial services business in Columbia.
Ufinet manages more than 75,000 kilometres of optical fibre in Latin America countries, Mexico and the United States, shepherding data in more than 2,000 towns and cities.
Enel bought its stake in Ufinet International in 2018 when London-based Cinven split the company in two, selling 100% of its Spanish business to infrastructure fund Antin and the Latam business into Cinven’s sixth fund.
Enel, through its Enel X International unit, will lose its right of joint operational control of Ufinet if it does not exercise the option by the end of the year.
($1 = 0.8673 euros)
(Reporting by Andres Gonzalez Esteberan in Madrid, Stephen Jewkes and Elvira Pollina in Milan; Editing by Mark Potter)