Evaluation and sale of fibre assets in Italy

The problem

Over the past few years, several local multi-utility companies in Northern Italy have deployed fibre metropolitan access networks (MANs) in their municipalities. Most recently, some of these companies have decided to turn their focus to core operations, and started selling their fibre assets to capitalise on their initial investments.

Among such companies, Iren (a fibre provider operating in Genoa and Sasternet’s majority shareholder) and Tea (a local multi-utility company operating in Mantua) both needed a strategic adviser to unlock the value of their fibre assets by assessing (1) the status and technical characteristics of the assets, and (2) their commercial potential especially regarding the deployment of NGA networks.

The solution

Analysys Mason provided support to each company by conducting a full commercial and technical vendor due diligence. We first drafted a red-flag report highlighting potential issues connected to the fibre network and its potential spin-off. This eventually led to the development of a sell-side due diligence report.

We reviewed (or built) each company’s business plan and its operations, and conducted a technical assessment of the network assets (in terms of architecture, quality, resilience and scalability). We developed a detailed market sizing model to verify the underlying subscriber and revenue projections; and several side business cases in order to assess potential revenue upsides (e.g. different network architectures including FTTH PtP and GPON, base station backhaul).

Analysys Mason led the management interviews, and was involved in the review of all the key documents (accounts, contracts, etc.). We also advised and coordinated the collection of the documents to be included in the data room, etc. Working alongside the other advisers, we provided support to our clients in their interactions with other stakeholders (e.g. network users, RoW owners) as well as with potential bidders.

We provided end-to-end support to our clients from the initial stages of the vendor due diligence report to scouting for potential investors, up until the closing part of the transaction.

The result

In August 2012, Iren sold its 85% stake in Sasternet to F2i (an Italian infrastructure fund) for EUR16.2 million; the Tea network sale process is still ongoing.

We also undertook the vendor due diligence of Metroweb in 2011. We executed a strategic review of the companies and the assets, and provided support to the clients throughout the whole evaluation and sale process.