Energy giant SSE is to sell half of its telecoms network business to Infracapital for up to £380 million, days after it called off a merger with rival npower.
SSE is to offload a 50% stake in its SSE Enterprise Telecoms business to Infracapital, the infrastructure arm of Prudential, with the proceeds used to pay down the company’s debts.
The deal values SSE Enterprise Telecoms at more than £700 million.
SSE said £215 million will be paid when the transaction is completed, which is expected at the end of June, and up to £165 million will be paid in instalments depending on the performance of SSE Enterprise Telecoms.
The deal will mean SSE Enterprise Telecoms can keep SSE as a key funder and customer as well as gain from Infracapital’s experience of driving growth, telecoms knowledge and providing access to additional funds.
Enterprise Telecoms is a telecoms infrastructure company, with a 12,000-kilometre fibre network across the UK providing connectivity services to businesses.
The capital injection from the deal will help with SSE Enterprise Telecoms’ expansion plans as it aims to become a leading player in the UK telecoms sector.
It is planning on developing projects in a number of areas including the 5G network, SD-WAN technology and smart cities.
Colin Sempill, managing director at SSE Enterprise Telecoms, said Infracapital’s investment in SSE’s telecoms network business “shows the confidence it has in the future growth of the business” and “it recognises the success we have achieved to date, building out a great network, winning notable contracts and being relentlessly focused on customer satisfaction”.
He added: “Both parties see this as an opportunity to help develop the network infrastructure that this country needs to turn the vision of the UK’s digital economy into reality.”
The deal comes after SSE and npower called off their merger on Monday, blaming “challenging market conditions” and the Government’s price cap. The two firms had planned to seal the merger of their retail operations in the first quarter of 2019.