The Price of the Toll

"We have a highway in front of us, it's time to take it." Octave Klaba wrote that near the end of the letter that came with last week's OVHcloud results, and nobody doubts the highway. Most of the letter is about something else: leverage kept under three times EBITDA, no new equity, free cash flow back above zero, and the word discipline, which management has made the theme of the year. It reads less like a company taking the highway than one checking the price of the toll.

In June 2017 I was a junior banker on the €400 million debt facility OVH signed with seven banks, and everyone around that deal was impressed. This was the Roubaix company that built its own servers and data centres and had just bought VMware's cloud business to go after the American market, a European company that did not ask anyone's permission. Nobody had to sell the challenger story. Nine years is not long in infrastructure, and it was long enough for the story to run the other way.

OVH's capex this year was about €373 million, a little less than the facility the banks signed in 2017. Amazon, Microsoft, Alphabet and Meta will spend some $730 billion between them this year, so OVH's whole year is about five hours of their spending. No quarter closes that gap. Nebius, headquartered in Amsterdam, is growing faster than any of them and has raised billions from outside investors to do it, so being European is not the explanation.

How do you tell a founder who went seventeen years without outside equity that staying relevant is now priced like a small country's GDP? In May, Mensch said he was worried about "us", the side of the industry that cannot raise that kind of money. OVH is the other case: a company with cash coming in that could ask, and has said it will not.

Put yourself in Klaba's place for a moment. You built OVH from nothing, and every time outside money came in, the family kept control. Raising what this market now asks for would end that, because whoever writes a cheque the size of a small country's GDP ends up running the company. Would you hand that over for a seat in a race the Americans are already several laps into? By the numbers Klaba watches, the old way still works: margins are up and the cash is coming in.

The instinct that builds a company on its own cash is the same one that can't imagine needing everyone else's.

OVH is the closest thing Europe has to a home-grown hyperscaler, and its year was about leverage, free cash flow and keeping control. When the continent's leading infrastructure company is worried about those things while the Americans spend a small country's GDP every year, the question stops being about OVH.