Altice, via its SFR FTTH branch, entered into exclusive negotiations a year ago to acquire 100% of the wholesale operator Covage.

The Association of Alternative Telecom Operators was quick to express its concern, because this merger was not "without raising profound questions about the preservation of an already fragile competitive intensity in the business and local authority market".

The European Commission "has cleared under the EU Merger Regulation the proposed acquisition of Covage by SFR FTTH, a company jointly controlled by Altice, Allianz and Omers. The clearance is subject to full compliance with a series of commitments offered".

Two commitments are made by SFR FTTH:

• "The sale to a suitable purchaser of 25 subsidiaries and assets corresponding to Covage's "optical local loop"" business in the territory of 30 public institutions. These subsidiaries and assets consist of FttO networks and represent in total approximately 95% of Covage's FttO business.
• "The offer of a transitional service contract, including access to all assets and services required to operate the divested business under competitive conditions for a period of time allowing SFR FTTH to become fully independent".

In conclusion, the Commission states that "the final commitments address the competition concerns identified by the Commission with respect to the acquisition of Covage by SFR FTTH and have been substantially improved following comments provided by market participants. The Commission has therefore concluded that the proposed transaction, as modified by the commitments, no longer raises competition concerns".

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Source : Next Inpact

After Altice at the end of November, it is Cube Infrastructure's turn to put its shares up for sale according to several sources. Covage's 50% shareholder paid 66 million euros in 2012 to buy back its shares from Vinci. However, Morgan Stanley Bank was mandated to find a buyer on the basis of a valuation of €1 billion.

The group's EBITDA would now reach €35 million for a turnover of around €100 million. "These ratios are not relevant. We are talking about an activity in full explosion with a very low maturity. In reality, the main driver is rarity," points out a good connoisseur of the file.
Charged by several departments with deploying optical fibre, Covage has already connected 630,000 of the planned 2.2 million households. The company still hopes to win a few more contracts to reach 3 million catches, which would represent just under 10% of French households.
When all the cables are pulled, Covage will be one of the few players to have such a digital infrastructure in a significant portion of the country. Indeed, once this task is completed, operators will have to pay a fee to use their networks.

€1.8 billion to acquire half of the optical lines that SFR must deploy outside major cities. But this deal is criticized in the industry because many believe that the infrastructure has been oversold. Indeed, the line rental prices highlighted could not be applied.

On paper, there are many candidates for the acquisition of Covage: investment funds, other RIP players, in particular Altitude or major operators...

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Source : Les Echos.fr