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Altice sells 70% of data centre business to Morgan Stanley Infrastructure

Written by Wed 22 Nov 2023

Telecoms and cable group, Altice France, is set to sell 70% of its data centre business to Morgan Stanley Infrastructure Partners (MSIP).

The transaction values Altice France’s data centre business, known as UltraEdge, at £666 million ($833 million). UltraEdge is currently part of telecommunications company, SFR, a subsidiary of Altice France.

SFR will also enter into a build-to-suit agreement with UltraEdge. As part of this agreement, SFR will be expected to generate around £152 million ($189 million) of additional proceeds to SFR within the next seven years.

UltraEdge comprises 257 interconnected data centres linked through SFR’s fibre network across France. The data centre provider offers 45MW of capacity and has office space covering 33,000sqm.

Plans are underway to separate UltraEdge from SFR’s overall data centre operations through a demerger. This move is part of a broader collaboration between Morgan Stanley Investment Management and Altice France, aimed at creating a leading independent distributed colocation provider in France.

“We believe the opportunity to create an independent and distributed edge colocation provider, benefiting from access to SFR’s nationwide fibre infrastructure in France, makes UltraEdge a very attractive investment,” said Yacine Saidji, Managing Director and Co-Head of Europe at MSIP.

As part of the demerger process, the physical infrastructure and equipment not actively processing data in the data centres will be transferred to UltraEdge. Active servers and equipment will remain with SFR.

By inheriting passive infrastructure and equipment, UltraEdge is expected to benefit from the distributed network portfolio, allowing the company to be close to end users.

MSIP and Altice France will collaborate to enhance infrastructure and expand the portfolio. The closing of the transaction is expected to occur in the first half of 2024, subject to regulatory approvals.

Altice Data Centre Business Sold to cut Debt

Altice France is owned by media and telecoms billionaire, Patrick Drahi. Reuters reported Drahi is focused on reducing debt and rebuilding trust with creditors after the arrest of his partner, Armando Pereira, over corruption allegations.

Drahi’s empire currently carries a total debt of £47 billion ($60 billion). 

The investigation has prompted concerns about the effectiveness of internal controls within the organisation, particularly in terms of overseeing operations and relationships with suppliers. 

In September, Altice engaged four investment banks to assess European assets for potential sales aimed at debt reduction.

In the same month, Les Echos reported that Drahi had enlisted asset management firm, Lazard, and universal bank, BNP, to investigate the potential sale of a minority stake of Altice France £2.6 billion ($3.2 billion) to investors. This valuation placed the telecom company at around £26.1 billion  ($20.8 billion).

Image Credit: Reuters

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Written by Wed 22 Nov 2023

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