Rai Way (AO) | Buy | Assessing the merits of consolidation and diversification

Research evidence excerpt

Rai Way (AO) | Buy | Assessing the merits of consolidation and diversification

digital infrastructure (hyperscale and Edge DC), media (CDN for IP-TV), as well as investments in

photovoltaic plants, are all synergetic, and the long-term EBITDA/capex guideline remains valid. However, the take-up of

distributed Edge DC/CDN services is still low as commercial efforts are underway, while the low-latency applications and services

market has not significantly materialised yet. Rai Way has started the pre-marketing activities on the hyper-scaler, but will only

start the second capex phase (extension of the hyper-scaler and number of Edge DCs) once they get more demand for existing

facilities.

What’s new?

The recent deadline extension to June 2026 should not be read as a sudden hiccup in the merger process. Governance should no

longer be an issue, and now the discussion is about how to provide sustainability and long-term protection to Rai Way through

the MSA contract, and the negotiated contractual terms would determine the fair value.

Regarding the Inwit issue, the company reiterated the view already expressed by the CEO: Rai Way is not actively involved in any

alternative project.

Our investment view

Rai Way´s main catalyst remains the merger, not really priced in. We give 70% chances in our SOP as we believe MFE will be

compelled into a deal (they may not find another exit opportunity if they somehow do not show commitment to fair MSA terms),

and the prospects of General Elections next year may also reduce the window of opportunities. In our view, the diversification is

also not priced in by the market, and we do see long-term value creation, but we acknowledge that the diversification needs more

visibility.