LANDMARK TRANSACTION WORTH £1.2BN OF REVENUES OVER TEN YEARS
Further to the announcement on 24 February 2015, Intelligent Energy ("IE"), the energy technology group, is delighted to announce that it signed, post UK market close on Wednesday 30th September, an agreement to acquire GTL Limited's ("GTL") energy management business to provide efficient and economical energy to over 27,400 telecom towers in India ("Energy Management Business")
What this means to Intelligent Energy
STRATEGY
· This landmark deal immediately provides a managed customer base of significant scale to which IE can begin to economically deploy its market leading fuel cell technology
· Essential Energy, a subsidiary of Intelligent Energy in India, will assume the power management for over 27,400 mobile telecom towers which represents approximately 6% of Indian telecom infrastructure
· In the UK context, this would represent over 50% of the total UK telecom tower sites, or in the US context, over 10%. Yet, in the Indian context, this represents only 6% of the overall market so there is room to grow
· This is another step in in achieving DP&G's current medium term target of 125,000 - 135,000 towers under management
· IE intends to engage a third party manufacturer located in India to assemble the fuel cell systems and to derive its revenue from IP licensing and support
FINANCIALS
· This transaction provides high quality, long-term, recurring cash flows
· IE initially expects to earn £120m revenue per annum or an estimated EBITDA and cash margin pre-financing of c.15%
· There is significant growth potential for EBITDA margins of 30% - 35% in due course, as the technology is introduced over the lifetime of the contract
OPERATIONS
· The deployment of fuel cells is expected to be economic where generators run off-grid for more than 8 hours a day
· This is currently the case for around 70% of sites and initial deployment is now anticipated to increase pace with wide scale roll-out occurring over the next 3 -5 years.
· Fuel cell stacks will be manufactured in Japan at SMILE's ready to scale production line in Yokohama, Japan. SMILE is a 50:50 owned joint venture between Suzuki and Intelligent Energy
This is just the start of what IE hopes will be more, similar transactions and are committed to investing in India for the long term to help support the current infrastructure and growing demand for mobile phones.
