Saturday, 28 November 2020

Allianz–Telefonica JV to pump €5bn into German FTTH

by Harry Baldock, Total Telecom
Friday 30 October 20

Germany remains behind many of its neighbours when it comes to fibre penetration, creating an opportunity for new players

Rumours have circulating for the last month were proved true yesterday, with Telefonica joining arms with Allianz Capital Partners to launch a €5 billion fibre-to-the-home (FTTH) joint venture (JV) in Germany.    Allianz and Telefonica Group will both own a 50% stake in the JV…

Rumours have circulating for the last month were proved true yesterday, with Telefonica joining arms with Allianz Capital Partners to launch a €5 billion fibre-to-the-home (FTTH) joint venture (JV) in Germany. 
 
Allianz and Telefonica Group will both own a 50% stake in the JV, with Telefonica investing an initial €500 million and Allianz €1 billion. In total, the two companies plan to invest €5 billion over the next five years.
 
The new fibre network is expected to span around 50,000km, with plans to reach over two million German homes. Geographically, the company will focus on rural and ‘semi-rural’ areas, with Telefonica’s COO saying earlier this year that the company would focus on FTTH in areas currently underserved by Germany’s other major operators.
 
As always, the deal is subject to regulatory approval.
 
Germany, like many European countries, has significant fibre targets for 2025. The country has one of the lowest fibre penetration rates in Europe, with FTTH Council Europe statistics showing just 3.4% household have subscriptions this year. While the UK fares little better (5.3%), France already sits at 31.4% and Spain at 57.9%. Needless to say, there is great scope for improvement here, creating a significant business opportunity for fibre companies.
 
This opportunity is not lost on the current crop of fibre companies and savvy investment firms. EQT and Omers Infrastructure, for example, bought fibre specialist Deutsche Glasfaser back in February for €2.5 billion and similar deals are being seen throughout Europe as the continent drives towards a full fibre future.
 
Nonetheless, the FTTH Council Europe still expects Germany to reach just 24.8% coverage by 2025, still well below the European average. Despite substantially increased targets from the likes of Vodafone and Deutsche Telekom, there is still much to be done.
 
 
Can Germany hit its ambitious fibre targets by 2025? Find out from the experts themselves at this year’s Connected Germany
 
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