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The price tag for Telia Carrier, which is now sold to Polhem Infra, can be explained by the fact that the company has previously been undervalued.
As Realtid previously reported, Telia Company divests its international carrier business Telia Carrier to AP-fund-owned Polhem Infra for SEK 9,450 million on a debt-free basis.
According to Anders Elgemyr, Managing Partner at Carlsquare, who acted as advisor to Polhem Infra, Telia Carrier has been undervalued by analysts.
“Telia Carrier is a hidden gem at Telia. Telia company has for a long time been thinking about what to do with the Carrier business and the analysts have not really understood the value of the Carrier business, says Anders Elgemyr, Managing Partner at Carlsquare, to Realtid. He continues: “Network infrastructure is the new infrastructure asset, after railways, gas/heat, water and electricity. There is only one investor in Sweden who has identified this, EQT, who bought IP-Only. However, IP-Only is much smaller than Carrier, which operates the world’s largest boarding network.
– A year ago, EQT paid 19.6x EBITDA for IP Only. A month ago, Eurofiber, with networks in the Netherlands and Belgium was sold for 23x EBITDA. The valuation for Carrier is 19x EBITDA. Prices are clearly on the rise and you should also understand that Telia Carrier, unlike the other players is one of the few global players and is ranked number one in the world in IP.
Telia Carrier is today the world’s leading internet traffic operator with many so-called “super scalers” on the customer list, including Google, Facebook, Netflix and Amazon. Telia Carrier operates a global network of over 74,000 kilometers of fibre networks with 320 connection points around the world.
“There is a huge organic growth in these networks. The networks were built around 1999-2000 and since then the operators have not invested internationally but rather in local fibre. The demand on the international backbone networks are constantly increasing as societies and companies increase their use of data and need for stable broadband services, which is the core offering of Carrier” says Elgemyr.
With a long-term strategic partnership between Telia Carrier and Telia Company, Telia’s customers will continue to benefit from Telia Carrier’s global network solutions.
“Telia Company and Polhem, as new infrastructure investors, immediately realised the potential in the deal together with the long-term partnership. Instead of divesting the network and merging it with competitors’ networks like, Colt, Verizon or Deutsche Telekom, this deal creates an opportunity for Telia Company to sell the network and continue to use it.” says Anders Elgemyr.