Monday, 26 October 2020

Telefonica raising €5bn for German FTTH network

by Harry Baldock, Total Telecom
Monday 12 October 20

The operator is reportedly in discussions with multiple banks and an infrastructure investor to acquire the cash

Telefonica is making a renewed push for the German fixed broadband market, on Friday announcing that its infrastructure arm is in negotiations to raise around €5 billion by the end of the month to invest in fibre-to-the-home (FTTH). The funding is reportedly being discussed with a number of banks, who are set to lend around two-thirds of the sum…

Telefonica is making a renewed push for the German fixed broadband market, on Friday announcing that its infrastructure arm is in negotiations to raise around €5 billion by the end of the month to invest in fibre-to-the-home (FTTH).

The funding is reportedly being discussed with a number of banks, who are set to lend around two-thirds of the sum, while the rest would be raised through the sale of equity, with an infrastructure investor already in the picture, according to reports.
 
The money will reportedly be released incrementally, as preset milestones are achieved.
 
The move follows a July announcement by Telefonica COO Angel Vila that the company would be targetting underserved areas in Germany for fibre build out using its new infrastructure unit.
 
The German market is still very much ripe for fibre deployment, being one of the worst fibre performers in Europe, with fibre penetration of around 3.3% according to FTTH Council Europe stats back in April. Of its immediate neighbours, only Austria (1.9%) and the UK (2.8%) performed worse, while France had 25.6% and Spain a huge 54.3%. Needless to say, there is growth to be had in Germany’s fibre market.
 
Given the pandemic and the many challenges that come with it, it is perhaps unsurprising that the process of connecting Germany has somewhat slowed. At the start of the year, fibre deployment was advancing rapidly, with fibre-player Deutsche Glasfaser particularly in the spotlight, having signed a network sharing deal with Deutsche Telekom in January and then being acquired by EQT and Omers in February. 
 
Now, fibre infrastructure seems to be a promising investment throughout Europe, with EQT today rumoured to be considering the purchase of Dutch national operator KPN. 
 
Earlier in the week, Telefonica also announced that its German unit had reached a deal with Deutsche Telekom to lease the latter's FTTH network for the next 10 years. Deutsche Telekom said the deal, the financials of which were not announced, would help them to “significantly accelerate [their] fibre-optic buildout in the coming years”, while Telefonica said that access would give them increased planning security and allow them to offer customers convergent products.
 
 
How far would this €5 billion investment go towards improving Germany’s fibre penetration rates? Find out what the experts think at this year’s Connected Germany
 
Also in the news: 
 

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