December 21, 2018 / 12:27 PM / 9 months ago

SSE to sell stake in telecoms business for $481 million

FILE PHOTO: An SSE vehicle is parked outside the Pitlochry Dam hydro electric power station in Pitlochry, Scotland, Britain, November 8, 2017. REUTERS/Russell Cheyne/File Photo

(Reuters) - SSE Plc (SSE.L) is planning to sell a 50 percent stake in its enterprise telecoms business to Infracapital after abandoning plans to merge its British energy retail operations with a unit of Innogy SE (IGY.DE), the company said on Friday.

SSE will sell the stake to the infrastructure equity investment arm of M&G Prudential for about 380 million pounds ($481.27 million), using the cash to cut down debt, it said.

The move is part of a wider strategy announced in November’s half-year results to focus on its core businesses of regulated networks, renewables, flexible thermal generation and business energy sales.

As part of that process, SSE had also sought to merge its struggling energy supply business with peer Innogy’s UK retail business Npower.

However, this deal was scrapped after a change in the performance of both companies’ retail businesses since the tie-up was first announced, and after a price cap proposed by regulator Ofgem was tougher than SSE had expected.

Dwindling returns at SSE’s energy supply business were a major factor in a 41 percent slump in half-year adjusted pre-tax profit.

Last month the company also announced plans to create a new company for its UK and Ireland renewable energy assets to help improve transparency and boost its ability to raise investment.

($1 = 0.7896 pounds)

Reporting by Sangameswaran S in Bengaluru and Susanna Twidale in London; Editing by Shounak Dasgupta and Jan Harvey

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