09 Oct Telefonica nears $5.9B FTTH deal in Germany – report | Light Reading
Telefnica Infra a new infrastructure division set up by Telefnica in the organizational rejig is in the “final stages” of wrapping up a deal worth some 5 billion (US$5.9 billion) to build an FTTH network, according to a Reuters report.
Details are a bit sketchy but, according to people familiar with the matter, Telefnica Infra is on the verge of signing a deal with banks and an “infrastructure investor.” Banks will apparently lend two-thirds of the money needed, with the remainder being stumped up in return for equity.
The Reuters report seemed to indicate that investors will get a stake in Telefnica Infra, but the creation of a separate German investment vehicle that sits within Telefnica Infra is more likely.
Telefnica Infra’s remit is an “open approach to agreements and shareholder structures [majority or minority], and to find the best partners for each type of asset,” and it applies to all markets in which Telefnica has a presence, not just Germany.
Telefnica Deutschland is likely to take a passive equity stake in the investment vehicle, say unnamed sources, and become an “anchor customer.”
What the FTTH?
Some are questioning the wisdom of building out more FTTH infrastructure in Germany’s highly competitive market and adding to Telefnica’s already substantial debt pile in the process.
“Maybe I lack the imagination, but I struggle to see a good starting point for Telefnica to build a FTTH network in Germany,” said one industry source cited by Reuters.
In July, ngel Vil, Telefnica’s chief operating officer, trailered the new FTTH network, emphasizing it will roll out to parts of the country overlooked by Deutsche Telekom, Vodafone and regional cable companies.
Perhaps to ease the financial burden of the new FTTH build, Telefnica Infra recently transferred about 10,100 mobile sites from Telefnica Deutschland to Telxius for a transaction fee of about 1.5 billion ($1.8 billion).
Telxius, in which Telefnica has a 50.01% stake, falls under the wing of Telefnica Infra. Other shareholders in Telxius include KKR and Pontegadea, two investment firms with respective stakes of 40% and 9.99%.
Ken Wieland, contributing editor, Light Reading