InfraBridge and Equitix Combine UK Altnets VX Fiber and Freedom Fibre

Rhea-AI Summary

VX UK Holdings Limited (VX UK) and Freedom Fibre Limited have signed an agreement to combine their businesses. InfraBridge will control the combined entity following the close of the transaction. The combined business will have more than 285,000 premises passed and will operate as Freedom Fibre Limited, run by Neil McArthur, Freedom Fibre founder and CEO. The transaction combines adjacent fibre to the premises ('FttP') networks focused on the North West of England and the Midlands.

Insights

Industry Analyst

The merger between VX UK Holdings Limited and Freedom Fibre Limited marks a significant consolidation within the UK's telecommunications infrastructure sector. The transaction will result in a combined entity with a more extensive network footprint, specifically enhancing fibre to the premises (FttP) capabilities in the North West of England and the Midlands. The merger's strategic nature lies in the pooling of resources and regional market penetration, which could lead to increased operational efficiencies and cost synergies.

The combined entity's growth trajectory is underpinned by existing contracts, such as VX UK's unique contract with Stoke City Council and Freedom Fibre's wholesale agreement with TalkTalk. These agreements provide a stable revenue stream and a platform for further expansion. The involvement of InfraBridge as the controlling shareholder post-transaction suggests a focus on long-term infrastructure development, while TalkTalk's continued minority stake aligns with its strategic interests in broadband provision.

Financial Analyst

The merger between VX UK and Freedom Fibre can potentially create shareholder value by leveraging scale and resource pooling to accelerate commercialization and network expansion. The focus on both retail and wholesale markets could diversify revenue streams, an attractive proposition for investors. However, the capital-intensive nature of expanding FttP networks necessitates a careful evaluation of the combined entity's financial health, including its ability to fund growth initiatives and service any existing debt.

The impact on the stock market will depend on the perceived benefits of the merger, such as market reach and cost efficiencies, versus the risks associated with integration and competition. Investors in the telecommunications sector will be particularly interested in the merger's potential to enhance market competitiveness against larger incumbents.

Telecommunications Expert

The merger's relevance extends beyond immediate financial implications, touching on the broader theme of infrastructure development in the telecommunications industry. The emphasis on FttP networks is a response to increasing demand for high-speed internet connectivity, a trend accelerated by shifts in work patterns and digital consumption. The combined business's strategy to offer both B2C and B2B services through a larger network may position it advantageously to meet these demands.

Understanding the technical aspects of FttP and its advantages over older technologies like copper-based broadband is crucial. FttP provides significantly higher speeds and reliability, which are increasingly required for modern applications. The merger could enhance digital infrastructure in underserved areas, contributing to regional economic development and aligning with government initiatives like the BDUK gigabit tender.

LONDON--(BUSINESS WIRE)-- InfraBridge-backed VX UK Holdings Limited (“VX UK”) and Freedom Fibre Limited (“Freedom Fibre”), two of the leading UK alternative local fibre providers, have signed an agreement to combine their businesses. InfraBridge will control the combined entity following the close of the transaction.

The transaction combines adjacent fibre to the premises (“FttP”) networks focused principally on the North West of England and the Midlands. The combined business will have more than 285,000 premises passed and combine the operations of VX UK and Freedom Fibre into a single group through the acquisition of the UK assets and operations of VX UK by Freedom Fibre.

The new business will operate as Freedom Fibre Limited and will be run by Neil McArthur, Freedom Fibre founder and Chief Executive Officer. Darren Woods, currently Freedom Fibre Chief Financial Officer, will have the same role in the enlarged business.

Both VX UK and Freedom Fibre have a strong regional presence in their respective markets. VX UK has a strong presence in Stoke on Trent and the surrounding areas through its unique contract with Stoke City Council, which provides connectivity for local authority premises, underpinning essential local services. VX UK markets its broadband service to local consumers through its LilaConnect brand, alongside a wholesale offering for local ISPs. VX also has fibre assets in Bristol and Colchester.

Freedom Fibre launched in 2020 and offers wholesale-only services on its network and benefits from a long-term wholesale agreement with TalkTalk, a leading UK broadband provider. Freedom Fibre secured its first Building Digital UK (“BDUK”) gigabit tender earlier this year and during 2023 has begun offering a range of B2B products. TalkTalk has been a minority shareholder since 2021 and will remain a shareholder in the combined business.

Damian Stanley, Managing Partner, InfraBridge, said: “The combination of VX UK and Freedom Fibre, with the backing of our shareholders, brings together two of the UK’s leading altnets into a new, stronger company. Our businesses are highly complementary, including our geographic proximity, the quality of our network build and our retail and wholesale go-to-market strategies, and we now have a platform with the support of TalkTalk to provide ongoing connections across the enlarged business.”

Achal Bhuwania, CIO, Equitix, said: “Scale and resources are both critical factors needed to successfully commercialise a UK altnet. This merger of Freedom Fibre and VX UK will contribute significantly to these two critical factors, accelerating the growth of the combined businesses, creating a larger network with both a wholesale and retail network offering for our growing customer base.”

Neil McArthur, CEO, Freedom Fibre, said: “This is a strategic merger which leverages the strengths of both Freedom Fibre and VX UK to create a larger, stronger and more diverse business backed by two significant investors with ambitions for growth. We are delighted to be joining forces with the VX team and are hugely excited about the future potential of this newly combined business.”

The transaction is subject to regulatory approvals and is expected to close by the end of Q1 24.

VX UK’s parent company, VNEXT AB, headquartered in Sweden, remains managed by InfraBridge.

VX UK was advised by Houlihan Lokey; Freedom Fibre was advised by Cameron Barney. Weil and Ashurst provided legal advice to InfraBridge and Freedom Fibre, respectively.

About InfraBridge

InfraBridge is a leading infrastructure investment manager dedicated to investing in mid-market businesses in transportation and logistics, digital infrastructure, and energy transition, among other key sectors. The firm’s investment strategy applies private equity rigor with an active approach to asset management in order to maximize value and drive returns on behalf of investors. InfraBridge is a division of DigitalBridge Group, Inc. (NYSE: DBRG), a leading global digital infrastructure firm managing a $75 billion portfolio of digital infrastructure assets on behalf of its investors. InfraBridge is headquartered in London, United Kingdom.
For more information, visit: www.infrabridge.com

About Equitix

Equitix is a responsible investor, developer and fund manager with assets under management of over £10bn. Equitix investments span all sectors of critical infrastructure, enabling communities to undertake everyday activities, functions and deliver essential goods and services that allow people to provide for their social and economic wellbeing. Its investment operational capabilities span construction, installation, and maintenance, providing safe and sustainable operations for all its service users. Equitix has invested over £2bn in its Network Utilities sector covering Fibre, Electricity distribution, Gas distribution, Heat and Water networks distributing power, heat, data and much more through its pipes and cables. Equitix is headquartered in London, United Kingdom.
Bringing infrastructure to life.
For more information, visit: www.equitix.com

View source version on businesswire.com: https://www.businesswire.com/news/home/20231217345007/en/

InfraBridge

Ceci.Reissmeier@digitalbridge.com

Equitix

equitix@teneo.com

Source: InfraBridge

FAQ

What companies have signed an agreement to combine their businesses?

VX UK Holdings Limited (VX UK) and Freedom Fibre Limited

Who will control the combined entity following the close of the transaction?

InfraBridge

How many premises will the combined business have?

More than 285,000

Who will run the combined business?

Neil McArthur, Freedom Fibre founder and CEO

What type of networks are being combined in this transaction?

Adjacent fibre to the premises ('FttP') networks