Infratil to acquire majority stake in Console Connect for $258m

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Console Connect offered a digital platform to allow businesses to connect to other digital assets such as cloud-based data centres. (File image)
Photo: 123rf

Infratil has signed a multi-million dollar agreement with a Hong Kong telco to invest in a digital infrastructure firm.

The NZX-listed infrastructure investor would acquire an initial 80 percent stake in Console Connect, owned by Hong Kong Telecom (HKT), for US$160 million (NZ$258m).

Console Connect offered a digital platform to allow businesses to connect to other digital assets such as cloud-based data centres.

Console Connect said unlike other Network-as-a-Service providers, it owned its underlying core network infrastructure.

The company said it owned 738,000 kilometres of fibre network and served 17 percent of all internet traffic.

As part of the agreement, it would enter into a strategic partnership with HKT, with both companies jointly investing up to US$295m (NZ$475m) over a two-year period following the completion of the takeover, to accelerate the growth of Console Connect, Infratil said.

Following the initial period of growth investment, Infratil would own between 60 to 80 percent of Console Connect, with HKT owning the remainder, it said.

Console Connect’s underlying earnings would be “neutral” for the first 24 months, and targeted US$40m-$50m in underlying earnings in 2025, it said.

“Ultimate ownership stakes will reflect the relative equity contributions of each party over this initial two-year period,” Infratil told the share market.

The strategic partnership included joint sales and marketing, investment in new submarine cable systems, and continued investment in research and development.

Infratil chief executive Jason Boyes said investment in Console Connect would help build its presence in Asia and complement its existing global digital infrastructure investments, such as CDC Data Centres and One New Zealand.

“Console Connect is a leading global software-defined interconnection platform, and this acquisition is a continuation of our conviction in the tailwinds of the digital infrastructure sector,” Boyes said.

HKT group managing director Susanna Hui said Console Connect had developed into a world-leading platform.

“We are pleased to have found a like-minded partner in Infratil who is excited about the potential opportunities to continue growing Console Connect,” Hui said.

The acquisition is expected to be completed by the third quarter of 2024, subject to regulatory approvals across 12 countries.