Earlier this month, worldwide telecom group Telefonica entered into its fourth Latin American fiber-to-the-home (FTTH) three way partnership (JV).
The deal was sealed in Peru after Telefonica agreed to phrases with funding agency KKR and Peruvian telco Entel.
This new fiber-based JV follows earlier agreements in Brazil, Chile, and Colombia. Let’s take a better have a look at Telefonica’s technique and look at the scope of the networks in query.
A Strategic Shift
In April 2022, Telefonica printed a weblog publish titled “Alliances to Join Latin America: The Future Lies in Cooperation”—setting out its imaginative and prescient to increase fiber protection in Latin America and deal with the digital divide.
Because the group defined, “Telefonica’s dedication to the take-off of digitalization in Latin America is progressing steadily beneath a brand new mannequin of strategic alliances. This spirit of cooperation is crucial to face the challenges of the digital divide and the deployment of recent networks.”
At that juncture, Telefonica had already closed three JVs in South America, and the technique supplied a blueprint for additional tie-ups in Europe and Latin America.
Brazil
Title of Fiber JV: FiBrasil
URL: fibrasil.com.br
Deal Agreed: March 2021
Deal Concluded: July 2021
Shareholder Construction
Telefonica Brasil (Vivo, 25%),
Telefonica Infra (25%),
CDPQ (50%)
The Deal
In March 2021, Telefonica Group and Canadian funding agency Caisse de depot et placement du Quebec (CDPQ) confirmed their settlement for the development, growth, and operation of a impartial, unbiased FTTH wholesale community in Brazil with the creation of FiBrasil Infraestrutura e Fibra Otica (FiBrasil).
CDPQ agreed to speculate as much as BRL1.8 billion ($317.8 million) within the three way partnership, comprising each major and secondary funds.
The deal closed in July 2021. Telefonica and CDPQ every maintain 50% of FiBrasil beneath a “co-control governance mannequin.”
Telefonica’s 50% participation is held by way of Telefonica Brasil (Vivo) and Telefonica Infra—the group’s infrastructure arm—with every enterprise holding a 25% stake.
The Community
Beginning with a portfolio of 1.6 million houses handed—by way of infrastructure contributed by Vivo—FiBrasil goals to increase its community to succeed in round 5.5 million houses handed inside 4 years. (Be aware: the networks contributed by Vivo represented a small element of Telefonica’s total fiber belongings in Brazil.)
Working as a impartial wholesale firm, FiBrasil is about to deploy and function fiber-optic networks in chosen mid-sized cities throughout Brazil outdoors the state of São Paulo.
FiBrasil can be poised to supply FTTH wholesale entry to all telecom suppliers, enabling them to supply these providers to their finish customers. It began operations with Vivo as its major anchor-client and has since signed business agreements with the likes of Sky Brasil and Vero Web.
In August 2021, FiBrasil boosted its community footprint when it introduced—and closed—a takeover for Fiberty 1.
In August 2021, FiBrasil boosted its community footprint when it introduced—and closed—a takeover for Fiberty 1, the Blackstone-backed firm beforehand referred to as Phoenix Fiber do Brasil.
Fiberty 1 presided over a 1,500-kilometer fiber community which handed round 170,000 houses. The deal was valued at EUR398 million ($470 million).
By the top of 2022, FiBrasil boasted protection of three.3 million houses handed in additional than 150 cities.
Chile
Title of Fiber JV: ON*NET Fibra Chile
Deal Agreed: February 2021
Deal Concluded: July 2021
Shareholder Construction
KKR (60%),
Telefonica Chile (40%)
The Deal
In February 2021, world funding agency KKR entered into an settlement with Telefonica to ascertain Chile’s first open entry wholesale fiber-optic supplier.
As per the settlement, KKR would purchase a 60% stake in Telefonica Chile’s current fiber community—apparently the biggest within the nation—and make that community open entry by way of a newly established unbiased Chilean firm with belongings managed domestically. Telefonica would maintain the remaining 40% stake within the enterprise.
The deal acquired regulatory approval in June 2021 and closed the next month.
The Community
The newly-formed InfraCo began operations with 2.4 million fiber passings, with a further 400,000 deployed because the tie-up was unveiled earlier that yr.
Immediately, the Chilean iteration of ON*NET presides over 23,000 kilometers of fiber—connecting 180 municipalities in 15 areas—passing greater than three million houses.
In October 2022, Chilean telecom group Entel agreed to promote its fiber infrastructure division to ON*NET Fibra, in a deal value $358 million. The belongings slated for inclusion embody a community that passes 1.2 million houses. The deal stays beneath regulatory overview.
Colombia
Title of Fiber JV: ON*NET Fibra
URL: onnetfibra.co
Deal Agreed: July 2021
Deal Concluded: January 2022
Shareholder Construction
KKR (60%),
Telefonica Colombia (40%)
The Deal
A matter of weeks after the 2 events closed their Chilean settlement, Telefonica and KKR introduced a brand new tie-up in Colombia.
As in Chile, the brand new firm can be 60% owned by KKR and 40% by Telefonica Colombia. Telefonica agreed to contribute its current FTTH infrastructure, which already handed 1.2 million houses.
The general transaction valued the brand new firm at $500 million. Telefonica acquired a cost of $200 million, together with the potential of a further, performance-based consideration of as much as $100 million. The transaction closed in January 2022.
The Community
With greater than 2.7 million houses handed with fiber, ON*NET Fibra’s Colombian unit now has a presence in 47 cities. The operator’s objective is to succeed in 4.3 million houses handed in 90 cities by 2024.
Peru
Title of Fiber JV: ON*NET Fibra de Peru
URL: TBC
Deal Agreed: July 2023
Deal Concluded: TBC
Shareholder Construction
KKR (54%),
Telefonica Hispanoamerica (36%),
Entel Peru (10%)
The Deal
In July 2023, KKR signed agreements to amass fiber belongings from each Telefonica Hispanoamerica and Entel, in hopes of creating Peru’s first nationwide open entry wholesale fiber firm.
The proposal seeks to mix the prevailing fiber networks of PangeaCo (a unit established by Telefonica in 2020 to speed up fiber building), Telefonica del Peru (TdP), and Entel Peru into an unbiased firm managed by KKR.
The brand new entity, ON*NET Fibra de Peru, might be 54%-owned by KKR, whereas Telefonica Hispanoamerica and Entel will maintain stakes of 36% and 10%, respectively.
Whereas TdP and Entel might be anchor tenants on the community, the ON*NET infrastructure might be open to make use of by all ISPs.
The worth of the transaction has not been disclosed, and the settlement is topic to regulatory approval.
The Community
PangeaCo was created in March 2020, and formally launched in November that yr.
In response to TdP’s Q1 2023 earnings report, as of March 31, 2023, its FTTH networks handed a complete of two.232 million houses. Of this determine, 1.417 million houses are handed by TdP’s infrastructure, whereas the remaining 815,000 houses are handed by Pangea networks. For its half, Entel’s fiber community passes round 1.2 million houses.
Put up-transaction, KKR plans to speculate an additional $200 million to extend the brand new firm’s fiber footprint to succeed in 5.2 million houses throughout 86 provinces by the top of 2026.
Future Offers?
Outdoors of Latin America, Telefonica has entered into a variety of fiber-optic JVs, specifically: Bluevia in Spain, alongside Vauban Infrastructure Companions and Credit score Agricole Assurances; Unsere Grüne Glasfaser in Germany, with Allianz Capital Companions; and UK-based nexfibre, in affiliation with InfraVia Capital Companions.
In Latin America, the group’s choices are extra restricted.
In Latin America, nevertheless, the group’s choices are extra restricted, and Telefonica Argentina (Movistar) is the one working unit with a considerable fiber footprint that might be leveraged within the near-future.
In February this yr, the Argentinian telco revealed that its FTTH community had handed the a million subscriptions milestone. At that date, the telco’s FTTH networks handed 3.8 million houses—a determine which is predicted to succeed in 4 million by end-2023.
Movistar launched business FTTH providers in Argentina in early 2016, initially overlaying chosen elements of Buenos Aires.
