25 Jan Orange brings in investors to boost rural FTTH | Light Reading
Orange is to sell 50% of its newly created Orange Concessions fiber unit to three investors as part of efforts to share the cost of deploying fiber-to-the-home (FTTH) networks in rural areas.
The France-based operator said La Banque des Territoires (a business unit of Caisse des Dpts), CNP Assurances and EDF Invest are to buy a 50% equity share that will value Orange Concessions at 2.68 billion (US$3.25 billion). The transaction is expected to close by the end of 2021.
Orange also said it will hold a call option that will enable it to take control and consolidate Orange Concessions in the future.
Orange Concessions brings together the operator’s 23 “public initiative networks” with a total of 4.5 million deployed or planned FTTH connections across France. Public initiative networks form part of the French National Broadband Scheme and are open to all operators on a wholesale basis.
The aim of the networks is to provide broadband access in rural and less densely populated areas that are less commercially viable for operators.
Stphane Richard, chairman and CEO of Orange, said the partnership is a “key milestone in the delivery of our Engage 2025 strategic plan” and provides Orange with the means to pursue the development of fiber in rural areas, “by winning new public initiative networks or by participating in market consolidation.”
In September 2020, the French government said it would spend 240 million ($291 million) on fiber networks as part of its “France Relance” (France relaunch) stimulus strategy. This sum was in addition to the 280 million ($340 million) that had already been allocated to local authorities for fiber rollout.
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Despite the government support, Orange is not the only French operator to have sought outside investors to finance FTTH deployments. In 2018, Altice Europe agreed to sell a 49.99% stake in the FTTH assets of its SFR subsidiary to a trio of private equity firms for 1.8 billion ($2.18 billion) in cash.
Also in 2018, Bouygues Telecom partnered with Axione, a unit of Bouygues Construction and its financial partner Mirova to create CityFast, a network access services provider dedicated to delivering FTTH connectivity to very densely populated areas of France.
In 2020, Iliad (Free) closed its strategic partnership deal with French private equity firm InfraVia via the sale of a 51% stake in Investissements dans la Fibre des Territoires (IFT), based on a 100% enterprise value of around 600 million ($729 million).
Formed specifically for the purpose of this partnership, IFT is tasked with acquiring and operating the group’s co-financed FTTH deployments outside very-densely populated areas.
Slow but steady: FTTH picking up pace
While far from a laggard in European fiber rollout, France is not exactly leading the charge.
According to data published by the FTTH Council Europe and IDATE in April 2020, France is ranked 16th out of 35 countries in terms of FTTH and fiber-to-the-building (FTTB) subscribers, with a 25.6% penetration rate as of September 2019.
According to French regulator Arcep, some progress was made in 2020. As of September 30, 2020, some 22.3 million premises were covered by an FTTH network up 33% compared to the previous year.
However, Arcep said the accelerated pace has not been found in very high-density areas, where it said the rate of progress has been insufficient for several quarters.
It noted that the increased pace of FTTH rollouts in areas covered by public-initiative rollouts produced the second strongest quarter ever in Q3 2020, with more than 450,00 additional premises passed.
The regulator said the total number of broadband and superfast broadband subscriptions stood at 30.3 million at the end of Q3 2020, which is 215,000 more than in the previous quarter and 685,000 more than the prior year.
Anne Morris, contributing editor, special to Light Reading
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