Brookfield agrees to US and UK telecom deals worth over $3bn

Brookfield has previously identified the sector as its leading deal driver for the next five to 10 years.

Brookfield Infrastructure Partners has agreed to buy US-based data transmission company Cincinnati Bell in a deal worth about $2.6 billion.

The deal, which the parties said they expect to complete by the end of 2020, is a public-to-private transaction and will see Brookfield pay $10.50 per share, representing a 36 percent premium to Cincinnati Bell’s closing price at the end of last week. The deal’s value is inclusive of debt.

Cincinnati Bell owns and operates a data transmission network in Cincinnati, Ohio and Hawaii and delivers fibre broadband, video and voice services to over 1.3 million homes. The business is expected to deliver “utility-like cashflows”, according to a statement by Sam Pollock, chief executive of Brookfield Infrastructure, the listed infrastructure company of Toronto-based Brookfield Asset Management. The company is upgrading its network to “next-generation fibre” as it prepares for the roll-out of 5G.

The deal comes just four days after Brookfield announced a deal to buy the UK-based Wireless Infrastructure Group, a mobile tower owner and operator, from 3i Infrastructure in a deal valued at £575 million (743.1 million; €670.4 million), including £387 million of equity for 3i Infrastructure’s 93 percent stake.

The sale has generated the London-listed fund a 27 percent gross IRR and a 1.7x gross money multiple following its initial investment in 2016. WIG was valued at £291 million by 3i Infrastructure at the end of September.

The sale came “unexpectedly” and was a “compelling offer”, according to a statement from Phil White, head of infrastructure at 3i Investments.

The deals for both Cincinnati Bell and WIG are thought to have come from Brookfield Infrastructure Fund IV, which is believed to be nearing a close above its $17 billion target. The equity cheque for WIG is just within Brookfield’s ticket size range, which is between $500 million and $1.5 billion, according to US pension plan documents.   

The deals further cement Brookfield’s concentration on the sector, which was foreshadowed by Pollock last year when he told investors that while the following five years would be an “even battle” between energy and telecoms investments, the latter would dominate during the decade.