Deals

AMP Capital ‘future-proofs inevitable market change’ with VX Fiber deal

The fibre company has a growing presence in Europe and is also the largest active operator in South Africa.

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AMP Capital has bought a majority stake in Sweden-headquartered fibre broadband business VX Fiber in a move that will see it enter a new strand of the fibre broadband value chain.

The company designs, builds and operates the networks that enable fibre-to-the-premises businesses to reach their connections. This makes it significantly different than other fibre businesses in the market, including those already owned by AMP Capital, Adam Ringer, a principal at the firm, told Infrastructure Investor.

“Other fibre businesses are vertically integrated. They are the owner, the operator and the brand. VX Fiber is the middle bit,” he explained. “It goes to people who own fibre and allows that fibre to operate properly. VX Fiber has a business model where it targets internet service providers who are effectively smaller players and who don’t have the ability to connect the fibre themselves. VX Fiber enables them to connect the fibre and then allows consumers to pick between which provider they want.”

Ringer compared the operations to electricity markets and said this model provides an extra layer of security to the business.

“There’s one electricity grid but you can pick a number of different service providers,” he added. “It future-proofs the inevitable market change when the regulators realise the monopolies created by the vertically-integrated operators and intervene.”

The networks are operated remotely from the company’s base in Sweden, although it is the largest active operator in South Africa. VX Fiber has significant projects in the UK in London and Stoke, and plans further expansion in Europe.

“It’s won contracts in Austria, Belgium and it’s got a growing presence in the very competitive German market,” said Ringer. “The investment is for Europe. We’re still very focused and committed to South Africa. We’ve got a significant presence and to the extent we can grow, we will.”

VX Fiber is the eighth investment to be made from AMP Capital’s $3.4 billion Global Infrastructure Fund II. AMP Capital declined to state what percentage of the fund has been invested to date.