Two left in contest for TPG Telecom’s Vision Networks

Vision Networks generates between $55m and $65m in annual earnings before interest, tax, depreciation and amortisation, and about $100m of revenue.

Bids for TPG Telecom’s Vision Networks are believed to be due next week, and so far the expectation is that it will be just Uniti and perhaps Vocus Group that will shape as the main two contestants.

DataRoom has learned Kohlberg Kravis Roberts is taking a look, but there are questions about how serious the New York buyout fund remains about acquiring the business.

Expectations were initially high for Vision Networks, with the business pitched as an infrastructure opportunity for superannuation funds, but after groups have carried out due diligence on the business, some say they believe the company is more veering towards the telco side of things rather than infrastructure.

One market expert said where subsea cables in the telco industry were not considered infrastructure at all, and telco towers were considered the ultimate infrastructure assets, networks that connect homes to the internet are considered somewhere in between.

In recent weeks, there had been suggestions that TPG had been keen for an investor that did not operate the assets to take only a passive stake.

DataRoom understands TPG’s preference is to attract a passive investor that takes only part of the business, say 40 to 50 per cent.

But the thinking now is that finding an investor of that nature is a tough ask, as many are sidestepping the opportunity.

Also, many parties are not keen to compete with Uniti, which has the most synergies when it comes to an acquisition.

Most had earlier estimated the price of Vision at about $1bn, so it will be interesting to see if offers come in around that number.

The business consists of the assets from former telco provider Neighbourhood Cable, based in regional Victoria, and the TransACT network in Canberra, which have been described as “quite old assets”.

TPG last year announced it had hired Bank of America for a strategic review of the division that connects internet to homes in new developments.

DataRoom believes Vision Networks generates between $55m and $65m in annual earnings before interest, tax, depreciation and amortisation, and about $100m of revenue.

Macquarie Asset Management and Aware Super purchased telco Vocus Group, while Morrison & Co and Brookfield own Uniti.

The first-round bids are due around March 7, a busy time in the infrastructure deals space.

In the same week, bids are believed to be expected for Spark Infrastructure’s renewable energy operation that is up for sale and the stake up for sale in Endeavour Energy.