Ravanelli (F2i): The tender to expand Ei Towers, followed by further consolidation


«The tender to expand Ei Towers,
then we aim for further consolidation»

Antonella Olivieri
Renato Ravanelli

The tender for the masts group begins on Monday:
F2i’s Managing Director lays out its strategies for the sector

«We are not sellers. We will keep the telecommunications masts.
Rai Way? Having two operators is abnormal»

The tender undertaken by F2i (together with Mediaset) for Ei Towers gets underway on Monday, while October 5th is tentatively scheduled for its conclusion. The objective is to delist the company, in order to pursue a more flexible, rapid growth strategy, as explained by the Chief Executive Officer of F2i, Renato Ravanelli. Mediaset, which founded the company and now controls 40%, will gradually dilute its stake, ultimately divesting itself entirely, allowing it to concentrate on its core business of content, thus opening the way for full control by the infrastructure fund, which currently holds 60% of 2i Towers, the special purpose company created for the tender. The tender bid depends on acquisition of 90% of the capital, but 2i Towers may also be willing to accept a smaller quantity, after which it would still merge with Ei Towers, which would automatically become unlisted.
The share price has essentially aligned itself with the tender price of 57 euros per share – a premium of 19.4% over the average price for the six months preceding the announcement – an offer that values the TV masts company at 1.6 billion euros, evidence that the market expects no markdowns due to efforts to resist the takeover or to counteroffers. «I believe the market understands the major upgrading efforts we have undertaken», observes Mr. Ravanelli.
But why delist the company?
The objective of the delisting, which we consider a key, irremovable part of this phase, is to allow the company to grow more rapidly and with greater flexibility. There is no ruling out a return to the market in the future, but at that point it will be a completely different company. Our goal is to make the most of all of its capabilities and potential.
Does that also mean finding a new balance for the capital structure, seeing that Ei Towers currently has a debt exposure of only 300 million euros?
That could be part of the strategy, though F2i also has noteworthy amounts of capital which can be invested in the project. For us, the important thing is to see the investment grow over the long term.
Don’t you need a listed company in order to carry out mergers through exchanges of shares?
Growth can be achieved through cash acquisitions as well. F2i has shown that it can collect capital funding easily and rapidly.
But the underlying logic of the masts sector remains consolidation.
The business as whole is reaching a noteworthy level of maturity. When this occurs, groups tend to favour deverticalisation, separating services from infrastructures. This ongoing evolution of the sector leads to both infrastructural consolidation and improved service. We have already seen as much in the field of energy, where our company has acquired a certain amount of experience.
When you speak of consolidation, you’re referring to the Italian market?
There are prospects for future growth both in Italy and abroad (our particular focus is on the rest of Europe). In terms of TV towers, with the release of 700 mhz frequencies from television broadcasters to mobile phone operators, the question of the noteworthy investments needed to provide a TV signal whose quality is at least equal to the current one inevitably arises. And at the time of this technological transformation, thought must also be given to whether it make sense to have two operators, or if the system would be more efficient with just one. Internationally, the process of separating service and infrastructures is already underway in the mobile phone service sector. Telecommunications groups are relinquishing a portion of their infrastructures, given that the networks frequently overlap each other.
Raiway is the first example all analysts point to.
It’s all a question of economic rationalisation: operating with two overlapping TV transmission networks is an abnormality found only on the Italian market. In the United Kingdom, for example, they had two infrastructures, but then they unified them into a single private operator with an authority to oversee access and establish criteria for service quality.
Inwit, a company 60% owned by the Tim phone company, has expressed interest in buying the one thousand mobile phone masts of Ei Towers. What is your response?
That we will not be selling. The technological-operational capabilities are essentially the same for TV towers and mobile phone service masts, even though the infrastructures involved are different. But TV towers can also hold telecommunications infrastructures.
Seeing that you are interested in telecommunications as well, could Cellnex be a possibility?
Cellnex is an extremely efficient company that has achieved a 55% share of its market in Italy. We look at them as a model of operational excellence.
But do you see this Spanish company, now a part of the Benetton group, as a potential partner or a potential rival?
That will depend on how our dealings with the operator evolve. The important thing is to consider business initiatives which increase efficiencies of scale, eliminate overlapping and heighten overall operating efficiency. We believe that it is very important to have independent operators under Italian control in a sector deemed to be of strategic importance for the country.

This is why you requested (and obtained) confirmation that the government would not invoke its ‘Golden Power’ veto over the Ei Towers operation?
“We deemed it was best to know from the start that there were no objections. We know that TV sector is considered a delicate one, of strategic importance to the country, and that Mediaset’s withdrawal from its controlling interest was seen as a positive development.
But Raiway is required to remain under 51% public ownership.
That much has been stipulated by decree. But in reaching our decision on the Ei Towers operation, we considered, first and foremost, the ongoing development of the TV transmission sector, which, as noted, looks like it will be extremely uneven in the years to come.
In the here and now, what will happen once the tender is concluded?
A new board of directors will be appointed, with F2i naming seven out of ten board members, including the chairman and the managing director, all of which confirms Mediaset’s intention to withdraw from the infrastructure business and concentrate on content. Once the tender has been successfully completed, we will work with management on the business plan, which we are confident of having ready by the end of the year.
But Mediaset will still have a 40% interest. How will that be diluted?
We have asked Mediaset, which is also the primary client of Ei Towers, to work with us during this phase. Later on, should there be extraordinary operations that call for capital increases, for example, Mediaset will not take part, and so its holding will be diluted.
How much equity will F2i invest during this first phase?
Approximately 700 million euros from our Third Fund, which will finish its collection activities in September, having totalled 3.6 billion euros, in excess of the original goal of 3 billion euros.
Your Third Fund still has assets to invest?
As of June, without taking into account the Ei Towers operation, 62% of the fund was already invested, proof that Italy is still an attractive investment destination. We have succeeded in bringing foreign capital to Italy, in the form of long-term commitments from international investors, who account for roughly half of our Third Fund.
Can you give us some names?
The two main foreign investors, each of which has invested half a billion euros, are the Gic Sovereign Fund of Singapore and the Psp Canadian Pension Fund, which may be working through a fund, rather than making its investments on its own, for the very first time. All of which demonstrates the trust placed in infrastructure investments managed by an Italian operator.

«We will name seven of the board members, including the managing director and the chairman: the new business plan will be ready by the end of the year»

Renato Ravanelli
F2i’s CEO

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