As Always, Valuation Matters for FTTH Investments by Private Equity

To a large extent, the driver for private equity investments in telco access network assets is the promise of value when those assets are upgraded to fiber-to-home access, particularly in markets where such networks are the “first” FTTH networks in a market. 

But the strategy also requires price appreciation or multiple expansion as well. Assume assets can be acquired for about $1000 per customer, less per location, and then upgraded to FTTH for another $1000 per location. 

The exit plan then assumes that the assets can be sold for more than the cost of the acquisitions and upgrades to FTTH. Recent transactions suggest per-home prices for FTTH assets that are at the high end of historic ranges. 

Year	Transaction value (per home)	Buyer	Seller
2023	$3,250	GIP	Zayo Group
2022	$3,000	Apollo Global Management	Lumos Networks
2021	$2,750	KKR	Hargray Communications
2020	$2,500	EQT	Suddenlink Communications
2019	$2,250	Warburg Pincus	Charter Communications
2018	$2,000	TPG Capital	MetroNet
2017	$1,750	Berkshire Hathaway	OnFiber
2016	$1,500	Goldman Sachs	WaveDivision Holdings
2015	$1,250	Carlyle Group	FiberNet Holdings
2014	$1,000	Providence Equity Partners	Clearwire Communications
2013	$750	Blackstone Group	FiOS Networks

So much hinges on sustainable valuations. But valuations can change over time, both up and down. The upside is sustainable higher valuations. The danger is any significant drop in valuations. 

Year	Acquirer	Target	Transaction Type	Per-Customer Price (USD)
2000	SBC Communications	Ameritech	Merger	3,550
2000	Vodafone	Mannesmann	Acquisition	2,500
2001	Verizon Communications	GTE	Merger	3,000
2003	Deutsche Telekom	VoiceStream Wireless	Acquisition	1,500
2004	AT&T	Cingular Wireless	Acquisition	1,800
2005	Verizon Communications	MCI	Acquisition	600
2006	AT&T	BellSouth	Acquisition	2,000
2007	T-Mobile US	AT&T Wireless	Acquisition	2,000
2008	SoftBank	Sprint Nextel	Acquisition	1,500
2011	AT&T	T-Mobile US	Acquisition	3,900
2013	Verizon Communications	Vodafone Wireless	Acquisition	1,300
2014	SoftBank	T-Mobile US	Acquisition	2,600
2015	Charter Communications	Time Warner Cable	Acquisition	1,800
2018	T-Mobile US	Sprint Corporation	Merger	2,100
2020	Charter Communications	Bright House Networks	Acquisition	1,700
2021	Cox Communications	Suddenlink Communications	Acquisition	1,600

Year	Acquirer	Target	Transaction Type	Per-Passing Price (USD)
2000	SBC Communications	Ameritech	Merger	300
2000	Vodafone	Mannesmann	Acquisition	200
2001	Verizon Communications	GTE	Merger	250
2003	Deutsche Telekom	VoiceStream Wireless	Acquisition	125
2004	AT&T	Cingular Wireless	Acquisition	150
2005	Verizon Communications	MCI	Acquisition	50
2006	AT&T	BellSouth	Acquisition	167
2007	T-Mobile US	AT&T Wireless	Acquisition	167
2008	SoftBank	Sprint Nextel	Acquisition	125
2011	AT&T	T-Mobile US	Acquisition	325
2013	Verizon Communications	Vodafone Wireless	Acquisition	110
2014	SoftBank	T-Mobile US	Acquisition	217
2015	Charter Communications	Time Warner Cable	Acquisition	150
2018	T-Mobile US	Sprint Corporation	Merger	175
2020	Charter Communications	Bright House Networks	Acquisition	142
2021	Cox Communications	Suddenlink Communications	Acquisition	133