Ardian’s acquisition of Adamo – one of the fastest growing European fibre optic operators and platforms – from EQT wins the EMEA Digital Infrastructure Acquisition of the Year at IJInvestor Awards 2022.

The $1.2 billion acquisition closed on 1 March 2022 – inside the judging period – and it sees Ardian take control of the business that focuses on rural areas and is supported by an open access wholesale business model.

The judges were impressed not only with the acquisition, but also the potential with one saying: “It’s not just about the acquisition – which I really like – they have an impressive plan for growth which is every bit as important.”

Another recognised the challenges ahead saying: “Rural broadband is always a tricky business model where the economics are not that clear, but this acquisition makes a lot more sense to me.”

This was Ardian’s first investment in the telecoms sector in Spain and the fund manager has announced its commitment to support Adamo's management team to boost the growth of its project, focused on rural areas with low internet penetration.

Adamo has an existing footprint of around 1.8 million homes covered, serving some 250,000 subscribers across 27 provinces in Spain.

Together with Ardian's support, Adamo will continue to drive the development of its project with the organic expansion of its network and analysing opportunities for the acquisition of new networks.

Adamo aims to reach 3.2 million homes and expands its backbone network to more than 11,000km in the coming years.

Its strategy is to deploy its network in rural areas where there is virtually no high-speed internet access, contributing with its services to bridge the digital gap.

Adamo has its own coverage in more than 14 autonomous communities in Spain and also provides connectivity services through its FTTH network to 4 of the main operators in the country and to more than 160 local operators.

The telecoms sector is a key pilar of the investment strategy for Ardian Infrastructure team, which will represent more than one third of the Ardian Infrastructure Fund V (AIF 5) portfolio.

According to the submission: “Our last infrastructure fund has a 30.2% controlling stake in INWIT, Italy's leading tower operator; a 26% stake in EWE, one of Germany's largest utilities and a leading provider of telecommunications services; 100% stake in Mila (including local pension fund) which controls the largest Icelandic telecoms network and in Adamo.”

The submission continues: “FttH deployment in Spain is not regulated and is a fully competitive activity. In order to mitigate the risk from competition, Adamo focused on rural areas which requires higher cost of deployment.

“As a result, Adamo enjoys a natural protection from overbuild of the network from other players. In addition, Adamo is benefitting from grants (UNICO/PEBA grants) from the Spanish government to reach the most remote and disperse houses.

“The transaction comes at a time of market consolidation in the telecom sector, given the tightening margins in the retail segment and the increase in competition of low cost players.

“As a result, largest operators are undertaking a disposal (total or partial) of the infrastructure assets from their core activities to monetize the value of the company.

“In this context, we expect neutral wholesale operators will play an essential role in the future.”