Brazil’s Eletronet overpriced at nearly US$200mn, claims source

Brazilian IP connectivity and data transportation company Eletronet is negotiating the sale of its operations for around 1bn reais (US$193mn), BNamericas was told.

According to a senior executive from a data network company, the value set by the company for its business may be “excessively high," at the equivalent of six years of Eletronet's annual gross revenue.

This source considers Eletronet's assets to have relatively strategic value for his company, but states that it is necessary to have “more clarity” about Eletronet's Ebitda. As it stands, the executive claimed the price means that the deal is "not worth it."

A second industry source noted that this is not the first attempt to sell the company, stating that they have been approached “a few times” about a possible acquisition of Eletronet.

BNamericas could not confirm the financial advisor currently assisting Eletronet in the sale process, but Banco Factor previously sounded out the market for the firm, according to local sources.

When contacted by BNamericas about the reported sale process, an Eletronet spokesperson said that it “is not aware of the information.”

Eletronet's connectivity relies on a national fiber network based on optical ground wire (OPGW) technology spanning over 17,000km, running alongside power transmission grids and via 166 points-of-presence (PoPs) deployed in 18 states.

This fiber network has been undergoing gradual modernization with supplier Ciena since 2018 to increase capacity. Brazil’s Padtec is another provider of optical equipment for Eletronet’s backbone network.

Eletronet recently completed the modernization of its southern ring, a 3,200km OPGW backbone linking the São Paulo hub to the country's south.

The company plans to increase its presence in major datacenters in the country, targeting at least 25 new facilities for the deployment of PoPs, the company's product and strategic projects manager, Célio Mello, told BNamericas in February.