The move has echoes of negotiations reported to be in train between Sky and Liberty Global in the UK earlier this week.
The Iliad Group and InfraVia (a French infrastructure fund) entered into exclusive negotiations to partner and accelerate the deployment of fiber optics (FTTH) in the “territories”, that is the less well populated areas of France.
This equates to about 26 million homes.
Iliad, whose share price has halved in the last year and a half, has created a new company dedicated to managing fibre lines, which, “will notably ensure the acquisition and operation of the Group's FTTH co-financing tranches in the areas concerned”.
Free, Iliad’s operating brand, proposes to transfer existing co-financing contracts and about one million lines already deployed and co-financed to the new company.
Iliad Group would divest 51% of this company to InfraVia setting the value of the new enterprise at some €600 million. This dedicated company will co-finance the construction in the new areas and will subscribe to co-financing new tranches.
This dedicated company will grant Free all access and information services to the co-financed outlets under a very long-term service contract.
It may also provide the same services to third-party operators.
Securing the market
The aim is to accelerate deployments in less densely populated areas and secure the Group's investments in fiber optic networks.
According to Iliad Group, this is consistent with the regulatory framework and the new European directives which encourage co-investment to accelerate fibre deployments in beyond major cities.
In the UK, Liberty Global, which plans to build out fibre infrastructure into the less well populated areas of the UK, is said to be in discussions with Sky, which is owned by the US cable giant Comcast.
A fibre-based Odyssey
The partnership is apparently part of Iliad’s Odysée 2024 plan. So far Iliad has 11.5 million “connectable outlets" [sockets]: and a commercial presence in all metropolitan departements (administrative areas) and claims to be the leading alternative FTTH network provider.
Last quarter it added 172,000 net full-fibre subscribers, more than any other network provider.
The transaction is subject to the usual conditions for this type of transaction in France, but it expected to close in the fourth quarter of 2019 after regulatory approvals are obtained.