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Telefónica creates a fiber optic giant in Brazil together with the Canadian fund CDPQ


The operator will receive 268 million for 50% of FiBrasil, the new company in charge of the deployment of the network

Telefónica has reached an agreement with the Canadian fund Caisse de dépôt et placement du Québec (CDPQ) for the construction, deployment and commercialization of a fiber optic network in Brazil through a wholesale and independent operator that gives access to all companies telecommunications

The agreement, which will be carried out through the subsidiaries Telefónica Brasil (Vivo) and Telefónica Infra, the infrastructure business unit of the telecommunications group, will give rise to a joint venture called FiBrasil Infraestrutura e Fibra Ótica (FiBrasil), according to has informed the National Securities Market Commission (CNMV).

After the closing of the operation, both parties will each have 50% of FiBrasil, also sharing the management.

The 50% stake in the Telefónica Group will be held through Vivo and Infra, with a stake of 25% each.

Canada's CDPQ will invest 1.8 billion reais (approximately 268 million euros), including payments to Telefónica Brasil for 50% of FiBrasil's capital and Telefónica Infra for 25% of it.

In this way, the operator chaired by José María Álvarez-Pallete replicates the operation that closed two weeks ago after selling 60% of its fiber optic network in Chile to the KKR investment fund for 500 million euros, through a new company (InfraCo), which will be in charge of operating and deploying it in the Andean country, and of which the subsidiary Telefónica Chile will keep the remaining 40%.

CDPQ's capital contributions, along with external funding to be obtained by the joint venture, will provide the funds necessary to undertake FiBrasil's business plan and achieve its deployment objectives.

The agreement is also very similar to the one signed in October 2020 with the insurer Allianz in Germany to deploy fiber network in the country through a 50% joint venture by both partners.

Network deployment

In this sense, it is expected to reach 5.5 million real estate units (homes and offices) passed through fiber in four years.

The construction, deployment and commercialization of the fiber network will be carried out in medium-sized cities outside the State of São Paulo.

Telefónica Brasil will contribute approximately 1.6 million real estate units passed by fiber, of the more than 15.7 million currently deployed by the operator, and will be FiBrasil's main client.

The closing of the operation will be subject, among other conditions, to obtaining the corresponding authorizations from the regulatory authorities.

The objective of this project is to accelerate the expansion of the fiber network to new locations through a model that requires less investment (capex) by Telefónica Brasil and captures value by entering third parties.

The telecommunications company recently highlighted that in the coming years it will continue to expand its fiber network, both through this new vehicle and through alliances or organically, to exceed 24 million homes in 2024.

Source: elparis

All business articles on 2021-03-03

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