Orange Polska, Cyfrowy Polsat kick off Polish infrastructure auctions -sources

WARSAW/FRANKFURT, Oct 1 (Reuters) - Orange Polska and Cyfrowy Polsat are launching auctions for Polish telecommunications infrastructure assets as they seek to free up cash for investment elsewhere, people close to the matter said.

Orange Polska, a unit of France’s Orange, has launched a process aimed at selling a just below 50% share in its fibre network seen worth roughly 1.5 billion euros ($1.76 billion), sources close to the matter said.

Cyfrowy Polsat is also launching the sale of telecom infrastructure assets including its mobile towers, seen worth 1-1.3 billion euros, and operated by its Polkomtel Infrastruktura unit, sources close to that deal said.

Orange declined to comment, while Cyfrowy Polsat was not immediately available for a comment.

Like European peers including Vodafone, Telecom Italia and Altice, the two Polish firms are looking to sell fibre networks or mobile towers as they seek to book capital gains to offset some of the costs of upgrading their networks.

Infrastructure assets generate predictable returns that rise in line with data traffic and have attracted an increasing number of investors eager to find ways of putting money to work in the current ultra-low interest rate environment.

Orange’s outgoing chief executive earlier this year told Reuters the company planned to sell a minority stake in its planned fibre company to fund investment in its fibre-optic network.

Orange Polska, advised by Lazard, has sent out first information packages to prospective investors hoping to benefit from high growth rates in Poland, sources said, adding demand for fast internet connections has surged.

While large cities already have a number of cable companies operating broadband networks with the risk of parallel grids - so-called overbuild - squeezing margins, supply is still limited in vast parts of the country.

Infrastructure funds such as Macquarie, Omers, Allianz, Antin, EQT and Brookfield are expected to be targeted in the auction, the people said, adding that those investors with the lowest cost of capital are expected to prevail.

Cyfrowy Polsat is working with BNP Paribas and investment banking boutique Trigon on the divestiture and is also in the process of launching its auction geared towards infrastructure investors, people close to that situation said.

In a busy market, other Polish telecom operators have also started exploring options for some key infrastructure assets.

UPC is looking for an investor to partner in its planned construction of a fibre network connecting several 100,000 homes, people close to the matter said.

Separately, Play Communications, which may become a part of France’s Iliad’s group under a recently announced $4.2 billion deal, is also considering selling some of its network infrastructure, including mobile towers.

UPC and the banks declined to comment or were not immediately available for comment.

$1 = 0.8510 euros Additional reporting by Douglas Busvine; editing by David Evans