The pan-European fiber and cloud operator Interoute is going on the acquisition trail this year after bringing in two new private equity investors. With a target of more than doubling revenue to €1B, who might they target for a bit of inorganic growth?
London's Aleph Capital and New York's Crestview Partners have entered into an agreement with Emirates International Telecommunications to buy a 30% stake in Interoute, with closing aimed for the end of April. EIT is an arm of Dubai Holdings, which has long owned a piece of the company alongside the Swiss-based Sandoz family. Whether EIT remains an investor or has been bought out entirely isn't mentioned in the release, but Interoute expects the deal to enable an acquisition strategy going forward. That suggests a further influx of money, which EIT may not have been as willing to provide as two aggressive private equity operators.
Interoute's intercity fiber network already spans most of Europe, but it could definitely use some more metro depth. Despite all the talk, not all that many potential fiber assets have seen consolidation up close. Interoute itself made one deal already, acquiring Vtesse last year for an expanded UK presence recently, and a few years ago they took over KPN's underlying fiber as well. While they could take a swing at a more pan-European asset like euNetworks, I suspect the initial fiber targets may have a more specific geographic focus - one country and/or a handful of markets. Alternatively, they could look to add new markets in eastern Europe more broadly, but I suspect depth would simply do them more good than breadth.
Interoute's other focus lately has been on its cloud ICT and virtual data center infrastructure, and adding more assets on that side of things may be easier in some ways. However, I suspect the auctions on the data center and cloud side could be more competitive than they have been at the fiber layer thus far.