Enel agreed to a deal on Monday that could see it spend more than 2 billion euros ($2.3 billion) to buy Latin American fiber company Ufinet International, as the Italian company looks to advance its ultrafast broadband ambitions.
Europe’s biggest utility said its Enel X unit would buy a 21 percent stake in Ufinet for 150 million euros ($175 million) with an option to buy the rest from owner Cinven for 1.32-2.1 billion euros.
“This deal further strengthens our position as a leading infrastructure operator in the region,” Enel CEO Francesco Starace said in a statement.
Enel, which controls Spain’s Endesa, is one of the biggest utilities in Latin America. Earlier this month, it paid almost $1.5 billion to buy 73 percent of Brazilian power company Eletropaulo.
In Italy, the state-controlled utility is rolling out a nationwide fiber optic grid through Open Fiber, which it co-owns with state lender CDP, to rival the network of phone incumbent Telecom Italia.
The company, which is using its existing Italian power grid network to house cable, has previously said it intends to repeat the project in other countries where it operates.
“Enel X will benefit from our experience in Italy through the Open Fiber joint venture to develop wholesale ultra-broadband,” Starace said.
Ufinet operates in 14 countries in Latin America and manages more than 49,000 kilometers of fiber, almost a third in metropolitan areas.
Enel said the call option it had on the 79 percent of Ufinet it would not immediately own could be exercised between Dec. 31, 2020 and Dec. 31, 2021.
Under the agreement with Cinven, Enel will have a right to joint control of the broadband wholesale operator but will lose that right if it does not exercise the call option.
Private equity firm Cinven bought Ufinet in May this year through its Sixth Fund for an undisclosed amount.
In a separate statement, Ufinet said the partnership with Enel would allow it to create the biggest telecom infrastructure company in Latin America, taking advantage of Enel’s presence in the area.
It said the injection of new capital would allow it to strengthen its international reach through a series of acquisitions.