SSE in £380m telecoms sale amid downgrades

Perth-based energy giant SSE plc said on Friday it agreed to sell a 50% share of its SSE Enterprise Telecoms business (SSEET) to Infracapital for up to £380 million.

SSEET operates a UK-wide private telecoms network and an estate of 15 data centres. Infracapital is the infrastructure equity investment arm of M&G Prudential.

The sale follows news on Thursday that both Moody’s and Standard and Poor’s downgraded SSE’s credit rating one notch.

The cash proceeds of the transaction will be used to reduce SSE’s net debt.

Neil Kirkby, SSE Enterprise Managing Director, said: “Infracapital has a proven record of actively supporting the companies they work with; this partnership heralds an exciting era of growth for our dynamic telecoms business.

“We both see huge opportunities for organisations capable of providing infrastructure that help give businesses reliable high-speed connectivity.”

James Harraway, Infracapital Director, said: “High-speed connectivity is vital to economic growth and prosperity and we are delighted to announce this partnership with SSE plc.

“SSE Enterprise Telecoms is an established telecoms infrastructure provider, with a 12,000km fibre network, and is well positioned to support growth in this critical sector.

“Infracapital has considerable expertise of investing in digital infrastructure and we look forward to working closely with our new partners as the business continues to grow, deliver new projects and expand its networks.”

On the credit downgrades, SSE said: “SSE notes the decisions of both Moody’s and Standard and Poor’s to downgrade SSE’s credit rating one notch following completion of both agencies’ reviews which were announced in September 2018 …”

SSE finance director Gregor Alexander said: “We have had constructive discussions with both Moody’s and S&P and understand why they have taken these decisions. 

“A Baa1/ BBB+ credit rating is one of the strongest held by private sector utilities across Europe and it should not have a significant impact on our ability to secure funding at competitive rates. 

“As a company with an increasing focus on regulated energy networks and renewable energy we remain committed to a strong balance sheet, supported by financial discipline and a commitment to taking the right decisions for the long term.”