Private Equity Partner Sees Fiber Broadband as a “Competitive Moat”

Private equity firms have been investing heavily in broadband providers in recent years, typically infusing cash into their acquisitions to expand operations, increase a company’s value and then do an initial public offering or sell the company at a profit several years later. What do private equity firms look for in a broadband acquisition? How involved are they in a provider’s operations? For EQT Group, fiber is a top selection criterion in making acquisitions. “EQT has developed a global playbook around fiber-to-the-home,” said Jan Vesely, a partner with global investment organization EQT Group. “The lack of fiber presence in the US, coupled with the increasing demand for symmetrical, high-bandwidth broadband is driving the large market opportunity for [fiber-to-the-home] (FTTH) deployment in the US,” he added. The company also looks for consistent track records of execution, experienced management teams, and competitive “moats,” Vesely said. An example of a competitive moat might be a market where a fiber company is the only high-speed broadband provider or where the company is one of two high-speed providers but the other isn’t fiber-based and where overbuild is economically or otherwise unfeasible.