Telefónica seeks to give entry to a partner in its fibre optic network vehicle in Spain

Telefónica has announced the constitution of the company Bluevía Fibra, intended to be the vehicle for investment and deployment of its fibre optic network in the Spanish market, and to which the operator will admit a new partner in the coming days.

The new subsidiary of Telefónica, which officially began operations on July 5, has as its corporate purpose the operation and exploitation of a fibre to the home (FTTH) network for the provision of wholesale FTTH bitstream access services and other connectivity services, excluding services.

Bluevía Fibra, which was born with an initial share capital of 3,000 euro, has Telefónica España Subsidiaries as sole partner, the company that manages the divisions of the company’s different businesses in Spain, such as Movistar, Prosegur Alarmas, TGT, Telefónica Audiovisual Digital (TAD), Telefónica Audiovisual Services (TSA), Telefónica Digital Education and Telyco. Telefónica España Subsidiaries, formerly Telefónica de Contenidos (it was renamed in 2021 with a change in corporate purpose), is directly controlled by the parent company Telefónica.

Similarly, the sole administrator of the new company is Nicolás Oriol Enciso, general secretary and responsible for regulation of Telefónica Spain itself.

The process launched by the company, in any case, is ambitious. The CEO of Telefónica, Ángel Vilá, announced last February the creation of a fibre investment vehicle for rural areas in Spain, with the aim of achieving coverage of more than five million homes passed with this new generation technology network. Of these, 2.5 million real estate units are already built by the operator itself. As a whole, Telefónica had a park of fibre optic lines in the Spanish market of 27.2 million, at the end of the first quarter of the year. The operator foresees the total migration to fibre in 2024, the year in which it celebrates its first centenary, and turning off the copper network in 2025.

The company also communicated its intention to admit partners, as it has done in countries such as Germany, Brazil, Chile or Colombia. In the process, which could culminate in the next few days, Telefónica has received advice from BBVA and AZ Capital. The objective of the company, throughout the process, has been through the sale of 49% of the capital of this new fibre vehicle, to raise close to 1 billion euro.

Now, the operator’s intention is to close the transaction with the new investment partners, before the end of the current month of July, although it does not want to fall into haste either. Groups interested in the fibre optic vehicle include Allianz Partners, Canadian financial group Caisse de Dépôt et Placement du Québec (CDPQ) and French firm Vauban.

In this sense, Allianz and CDPQ are already partners of Telefónica in its fibre optic vehicles in two of its strategic markets, Germany and Brazil, respectively.

At the end of April, within the latest reorganisation of the management of Telefónica Spain, Emilio Gayo appointed Luis Rivera as CEO of the new fiberco.

The truth is that the fibre optic market is experiencing a boiling moment in the Spanish market, with the entry of investment funds interested in these businesses. Last May, AXA IM Alts and Swiss Life Asset Managers announced that, through a new joint venture, they had agreed to acquire Lyntia Networks, one of the leading companies in this segment in Spain, from Antin Infrastructure Partners. The transaction, valued at close to €2 billion, is subject to customary regulatory approvals and is expected to close by the end of the year.

Previously, at the end of 2021, the Red Eléctrica Group agreed to sell to KKR a 49% stake in Reintel, its dark fibre optic division, for a total price of 971 million euro. The energy company indicated that, with this transaction, it obtained capital gains of 900 million. In this way, KKR expanded its presence in the telecommunications sector in Spain, where it is already one of the reference shareholders of MásMóvil.

In turn, in the autumn of last year, the Swedish group EQT Private Equity reached an agreement for the sale of 80% of the capital of Adamo, one of the main Spanish fibre optic operators in rural areas, to the Ardian Infrastructure fund. The transaction was valued at around 800 million euro.