Strategic investment in
Infratil investor presentation
10 July 2023
Transaction Summary
Infratil has executed a conditional agreement with HKT to accelerate the growth of Console Connect through a strategic partnership
Transaction summary
Valuation & returns
Approach to funding
Timing & conditionality
- Infratil has executed a conditional agreement with HKT Limited (HKT) (SEHK: 6823) to establish a strategic partnership to accelerate the growth of HKT's Console Connect business
- Transaction structure to align interests:
1-
2- Console Connect business to be driven further with HKT in a joint sales and marketing effort
3- Console Connect owns its Tier 1 global IP network, as well as long-term integrated access to a global backbone network
4- Accelerate Console Connect's investments in network infrastructure and technology platform
- Infratil will ultimately own between 60-80% of Console Connect, with HKT holding the remainder
- ultimate ownership stakes will reflect the relative capital contributions of each party
- As the majority investor, Infratil will have significant governance rights and, working alongside HKT, will continue to drive the development and growth of Console Connect
- 3.4x FY2022A revenue multiple for Console Connect's software-defined interconnection ("SDI") platform
- Platform expected to generate returns consistent with Infratil's target returns of 15 - 25% for development assets
- Initial Infratil consideration of US$160 million, including an earnout and subject to usual completion adjustments for cash, net debt, and net working capital
- Strategic partnership with HKT, with both jointly investing up to US$295m in Console Connect to accelerate growth via marketing, R&D and new subsea cable investments over a 2-year period
- Infratil's investment will be funded through available capital and existing bank facilities
- as at 6 June 2023, Infratil had total available liquidity of ~NZ$1 billion
- Completion of the acquisition is conditional on telecommunication, foreign investment regulatory approvals and merger approvals
- Completion of the Console Connect investment is currently expected by Q3 2024
2
Investment
Thesis
High-performing, reliable global networks are essential to
1 | This is an idea | 2 | Clear benefits of | 3 | Innovative offering with |
that matters | growth and scale | strong value proposition |
supporting an increasingly digitised global economy
- Digital network infrastructure is increasingly important to meet exponential growth in global data demand
- Global data traffic expected to increase at 18% CAGR over the next 5 years1
- Global subsea networks are critical digital infrastructure, carrying over 95% of global internet traffic2
- Subsea cable bandwidth is expected to grow at 34% CAGR to 20283
- Software-definednetworking technologies have revolutionised network provisioning, enabling businesses to scale and reduce costs easily
- Significant need for a centralised global communications platform to optimise networking management and provide critical connectivity
- On-demandmodel is a capital efficient way to monetise unused network capacity, significantly improving network economics
- Clear path for Infratil to grow global platform, driven by secular tail winds
- Thought leadership and R&D capabilities to create and maintain competitive differentiation as digitisation increases and number of use cases grow
- Potential for strategic partnerships with Infratil's portfolio companies and other ecosystem players
1 Ericsson Mobility Report November 2022; | 2 Atlantic Council, Wall Street Journal; 3 TeleGeography Global Bandwidth Forecast Q3 2022 | 3 |
What is Console Connect?
Console Connect
1
Console Connect
2
HKT Joint Sales & Marketing Effort
is a leading communications service platform, that provides
Top 3 global software-defined interconnection ("SDI") platform
Next-generation enterprise connectivity solution enabling
1,000+ customers to:
- Instantly self-provision private and secure connections across a global ecosystem
- Monitor network usage in real time, purchase bandwidth on a pay-as-you-go model, and order value-added services via a centralised user portal
Offer critical fibre infrastructure and IP access to enterprises, content providers, and service providers in partnership with HKT
- Joint go-to-market via HKT-supported approach to existing and new enterprise and wholesale ("E&W") customers
- Recurring revenue model
next-generation
Underpinned by
connectivity solutions
3
Integrated with Tier 1 global network
Top 10 Tier 1 network globally
738,000 route | ~170 cloud zones | carries 17% of all |
kilometers | reached | internet traffic |
59+ Tbps bandwidth | 900+ data centre | 70 international |
capacity | PoPs | cable systems |
4
Platform and network development
R&D initiatives and proprietary pipeline of
subsea cable development projects
- Clear pathway to increase Console Connect's network capacity to meet customer demand
- Intention to partner with HKT to accelerate Console Connect growth via network and R&D initiatives
4
How Console Connect Works
Next generation
The Console Connect solution
Connect to: | Through a centralised user portal: |
connectivity solution solving multiple enterprise pain points
Your office
building
Console Connect
enabled data centre
(900+ locations
worldwide)
Console Connect
platform
Underpinned by a
Tier 1 subsea cable and IP network and access to global wireless towers and terrestrial backhaul
your office branches
data centres
clouds
SaaS platforms
internet exchanges
IoT & mobile operators
Mobile endpoints
Providing efficiency and cost savings:
- Monitor network usage in real time
- Utilise bandwidth and internet access on demand
- Order other value-added enterprise IT services all through a centralised user portal
5
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Disclaimer
Infratil Limited published this content on 09 July 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 09 July 2023 20:43:07 UTC.