Telefónica and Allianz have reached an agreement for the creation of a joint venture to deploy Fibre-to-the-Home (FTTH) in Germany.
Following closing, Telefónica Group and Allianz Group will each hold 50% in the joint venture company under a co-control governance model. Telefónica Group’s participation will be held through Telefónica Infra (its infrastructure unit) holding 40% and Telefónica Deutschland / O2 holding a 10% stake. Allianz Capital Partners will invest 50% in the joint venture on behalf of Allianz insurance companies (“Allianz”) and the Allianz European Infrastructure Fund.
Operating as a neutral wholesale company, the joint venture is set to deploy local fibre optic networks in underserved rural and semi-rural areas across Germany and to offer FTTH wholesale access to all telecommunications service providers so they can in turn offer these services to their end customers.
Allianz, one of the world´s leading insurers and investors, and Telefónica as one of the largest telecommunications service providers globally provide strong pillars supporting the company’s ambitious plans. Allianz contributes its experience from several fibre investments, longstanding investment strength and expertise as well as strong local presence. This investment follows Allianz’s commitment to significant fibre roll-outs in France and Austria.
Telefónica brings its technical capabilities and expertise in deploying and operating fibre networks. Telefónica Spain will provide network design and operations expertise throughout the deployment years. In addition, the company will benefit from Telefónica Deutschland / O2 distribution power over its various on- and offline channels as its first wholesale client and provider of certain transport infrastructure.
As an independent FTTH open platform, the company is uniquely positioned to unlock the enormous potential of Europe’s largest broadband market whilst at the same time contributing to Germany’s social, economic and digital development.
The newly formed company aims to deploy more than 2 million Homes Passed in rural and semi-rural areas creating a fibre network of over 50,000 kms delivering environmental benefits through energy efficient operations and enabling the transition to fibre in the deployment areas.
The joint venture intends to invest up to EUR 5 billion through different sources of funding: shareholders’ equity, a long term subordinated loan plus non-recourse external financing. Investments are spread out during the 6 year deployment period, Telefónica will invest up to EUR 0.5bn equity and Allianz will invest up to EUR 1.0bn through different instruments. This business opportunity allows Telefonica to crystallize the value of its know-how whilst safeguarding the Group’s financial priorities in the interests of all stakeholders, through a ring-fenced and non-consolidated structure.
The transaction is subject to the approval of the competent merger control authorities and closing is expected to occur in the first half of 2021.
