Telefónica Group, one of the largest telecommunications service operators globally, and Caisse de dépôt et placement du Québec , a global investment group, have reached an agreement for the construction, development and operation of a neutral and independent optical fibre wholesale network in Brazil with the creation of FiBrasil Infraestrutura e Fibra Ótica SA.
Upon completion of the transaction, Telefónica Group and CDPQ will each hold 50% in FiBrasil under a co-control governance model. Telefónica Group’s 50% participation will be held through Telefônica Brazil (“Vivo”) and Telefónica Infra, the infrastructure arm of Telefónica Group, each holding a stake of 25%.
Operating as a neutral wholesale company, FiBrasil is set to deploy and operate fibre-optic networks in selected mid-sized cities across Brazil outside the state of Sao Paulo, and to offer fibre-to-the-home wholesale access to all telecommunications service providers, enabling them to offer these services to their end customers. Starting with a portfolio of 1.6 million Homes Passed (“HPs”) contributed by Telefônica Brasil, FiBrasil aims to expand its network to reach around 5.5 million HPs within 4 years, accelerating the transition to fibre and contributing to the country’s technological deployment.
CDPQ is investing a total of up to R$1.8 billion (CA$408 million) in this joint venture, comprising both primary and secondary payments. CDPQ’s projected capital contributions and the expected leverage to be raised by FiBrasil provide a fully funded business plan to accomplish the company’s deployment targets. FiBrasil is set to become a leading operator in the Brazilian fibre space, with the backing of a strong set of shareholders.
As one of the world’s largest global institutional investors in infrastructure with net assets of CA$30 billion (R$ 136 billion) in this sector, CDPQ contributes its strong investment capacity and longstanding expertise in managing infrastructure investments. Telefónica provides strong pillars supporting the company’s growth plans and brings its technical capabilities and track record in deploying and operating fibre networks. In addition, FiBrasil will benefit from Vivo’s commercialization capabilities over its various on and offline channels as its anchor client
The transaction is subject to regulatory approval and closing is expected to occur in the second quarter of 2021.