Strong first year for telecom JV in Eastern Finland – VALOR served as financial advisor 

The joint venture established by Finnish telecom operator BLC Telecom and the infrastructure fund OP-Suomi Infra in the fall of 2022 is rapidly expanding the fibre optic network in Eastern Finland. VALOR served as the investor’s financial advisor in the JV transaction and assisted in creating the business model.  

Fibre optics, with its reliability and speed, has become the preferred choice for an increasing number of consumers in meeting their ever-growing telecommunication needs. 

Responding to this demand in Eastern Finland, a joint venture was established in 2022, incorporating the Finnish cooperative Savonlinnan BLC-Osuuskunta’s existing fibre optic network and telecom towers, along with the construction of new ones. Co-owners are BLC and the infrastructure investment fund OP-Suomi Infra, providing resources for significant investments. 

Strong expertise in telecom and acquisitions  

VALOR Partners was selected as OP-Suomi Infra’s financial advisor for the process to establish the joint venture and to create the business plan.  

Through the company’s extensive experience in telecommunication infrastructure mergers and acquisitions, investment banking, as well as strategic and operational consulting within the industry, VALOR brought valuable expertise to the development of the business model and key terms under which the joint venture would operate.  

“VALOR had a clear vision of the key questions and the necessary actions to achieve a well-functioning arrangement,” explains Tuomo Urrila, member of OP-Suomi Infra investment team. 

“Our two-way cooperation with both BLC and VALOR was excellent. With VALOR facilitating the process, we quickly found a mutual understanding of how we wanted to proceed with the project,” Urrila adds. 

According to Hannu Väänänen, managing director for Savonlinnan BLC-Osuuskunta, the telecom industry is highly regulated with unique features of which VALOR brought its deep expertise to the project, while also acting as a balancing partner, both reinforcing existing insights and providing new information. 

Decision-making model clarified tasks  

The process proceeded step by step. First, a joint vision for the company was set , and a consensus was reached on the value of the existing infrastructure.  

“In comparison to a typical transaction, VALOR’s role was broader, as they assisted both parties in grasping the separable and sellable entity at a more detailed level. They performed well in all tasks,” Urrila says. 

The next, even more crucial step was to build a future financial operating model that would incentivize both parties. This model was developed gradually over the course of the process.  

“VALOR’s specialized expertise was strongly evident in this, and highly convincing. Creating the financial operating model was like crafting a work of art,” Väänänen says.  

After completing the JV transaction, the decision-making model developed during the process has proven to be an excellent tool. It has provided a solid foundation for business operations and investment decisions. VALOR’s work was also useful when preparing the business plan.  

“The significant effort put into anticipating future investments has been fruitful and clarified our work. The financial operating model has been operationally successful, and shared values have facilitated collaboration,” Urrila highlights.  

According to Urrila, the process of completing a JV transaction with the support of VALOR was a positive experience. 

Picture: BLC

Successful first year 

The first year has started off beautifully. The JV partners came together seamlessly during the process, and open communication has continued. New network projects were already in preparation before the deal was completed, so the new company got off to a flying start. 

“Production has increased sevenfold in the past year, and the organisation keeps growing; it’s a significant leap for us,” emphasizes a pleased Väänänen.  

However, competition in the industry is fierce, and foreign investors have also entered the market, including Eastern Finland.  

“BLC is a genuinely Finnish operator with a 130-year history and no foreign background, which makes our brand strong,” Väänänen highlights. “It is more comfortable for consumers to purchase services from a reliable domestic supplier who delivers on promises and will certainly still be in the market in the future.” 

A societally significant project 

VALOR partner Jonas Seemer, responsible for investment banking operations, highlights that the established joint venture between BLC and OP-Suomi Infra was an unconventional project, in which a societally significant and unique regional joint venture was created.  

“The entirety was not a separate business previously; it was created through a carve-out from BLC,” adds project manager Valtteri Itäranta. “Our task was to ensure the creation of a new company beneficial to all parties with a clear business model.”  

“Due to the increasing importance of the fibre optic network, this was a valuable project for the Savo region in Finland, made possible through the efforts of a local operator, enabling reliable access to a fibre network for every resident,” emphasizes Antti Halonen, VALOR partner responsible for ICT-customers. ”We were delighted to participate in this domestic project, where improved infrastructure is being built for the people of Eastern Finland.” 

Text: Catarina Stewen
Pictures: BLC, City of Savonlinna