Eurofiber: CIF, BT possible bidders, or an IPO for further growth

Thursday 23 October 2014 | 16:01 CET | Background

The Dutch dark fibre provider Eurofiber is up for sale, according to a report in the paper De Telegraaf. The company's owners, private equity groups Doughty Hanson and Reggeborgh (Dik Wessels), are reportedly considering an IPO or sale of the operator. Doughty Hanson acquired in April 2012 a majority stake in the company from Reggeborgh, thought to be around 80 percent. Since then Eurofiber has expanded significantly, reaching EUR 95 million in revenue and profit of EUR 19 million in 2013. In addition to dark fibre, Eurofiber offers data centre services and connects the mobile sites of Vodafone, T-Mobile and Tele2. The potential buyers include Dutch infrastructure investor CIF or a business/wholesale operator like BT. 

While no recent figures are available, previous reports show Eurofiber invested significantly through 2011 in expanding its network, spending as much as half its annual revenue and leaving little left over in cash flow. A year ago it secured EUR 195 million in external financing, suggesting it has maintained a high level of investment. The company has a dense network throughout the Netherlands, with extensions into Belgium (almost to France) and Germany. 

Eurofiber has a unique network, with its dense coverage offering a range of applications. Not only can it provide FTTO (enterprise and business parks) and FTTS (mobile sites), but it can also reach almost any other imaginable location besides households (FTTH), such as institutes and waterways. Only the KPN network is more extensive in the country.  

The dense coverage of Eurofiber's network offers a number of opportunities for expanding its services range. For example, wireless extensions, such as Wi-Fi access points, could provide a new source of revenue. However, the company's wholesale-only strategy to date may be a barrier to its sale. If for example, Vodafone were to buy Eurofiber, it would suddenly have two of its biggest rivals, T-Mobile and Tele2, as customers. 


Despite Vodafone's focus on access networks for the consumer market, the company is a candidate to buy Eurofiber, based on its recent string of acquisitions in the fixed market. KPN can be ruled out, as such a deal would concentrate the market too much and customers that did not want KPN as a provider would probably leave Eurofiber as well. Tele2 has its hands full at the moment with the roll-out of its own mobile network.

T-Mobile, Liberty Global and business providers will likely also have a look. The same as Vodafone, T-Mobile could have a conflict of interest, but it already has Tele2 as a wholesale customer through their roaming agreement. The takeover could provide an expansion market in wholesale and eventually the enterprise segment. However, T-Mobile's current strategy is focused on consumer and mobile. Liberty Global could profit from the Eurofiber network to provide backhaul for its growing Wi-Fi network. It could also enter new markets with the takeover. Liberty though is also more focused on the consumer segment.

Players such as BT are also candidates, given their focus on the enterprise and wholesale markets, as are international operators like Zayo (built on continuous acquisitions), Interoute, euNetworks and Easynet. Operators such as Orange (its Horizons programme aims to bring the operator to new countries) and AT&T could also be interested, but they are unlikely to want to spend several hundred million on acquiring a position on the small Dutch market.   

On the Dutch market currently, there is only one other player with a wholesale-only strategy: CIF, the Communications Infrastructure Fund set up by a number of pension funds. Eurofiber would be a good fit with its existing portfolio. 


Eurofiber is an attractive company that is not vertically integrated. It's also achieving high growth, making plans for a sale no surprise. On paper, CIF is a good candidate to acquire the company, and we can also expect international players such as BT or Zayo to have a look at Eurofiber. An IPO also can't be ruled out for the company, which is fairly unique and would have difficulty fitting in most operators' portfolios. An IPO could provide fresh capital to stimulate organic growth as well as pursue takeovers elsewhere in Europe. 

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