Expedites upgrade to 1 Gbps service for 24m German homes
UK-based Vodafone Group and French telco Altice are creating a Fibre Company joint venture, FibreCo, to run fibre-to-the-home (FTTH) for 7 million German homes in the next six years. The new FibreCo will be split 50:50 between Vodafone’s German division and Altice. FibreCo will benefit from Vodafone Germany’s commercial expertise and relationships with housing associations and Altice’s unique FTTH roll-out, wholesale and operational expertise, said the partners in a statement. “We are proud of our long-standing relationships with housing associations and pleased as a trusted provider to bring more connectivity options for tenants,” said Vodafone Group Chief Executive Nick Read. “This significant infrastructure investment supports the country’s social, economic and digital development and the broadband ambitions of the German government as part of Europe’s Digital Decade targets.”
To this end FibreCo has contracted Altice subsidiary Geodesia for the majority of the roll-out operation’s construction and maintenance. The creation of FibreCo is expected to be completed in H1 2023. “We have pioneered fibre joint ventures in France and Portugal and are thrilled to replicate such a feat in Germany with such a partner,” said David Drahi, co-CEO of Altice.
Vodafone Germany (VG) offers up to 1Gbps connections to 24 million homes. The Altice partnership gives it a clear upgrade plans for its existing hybrid fibre cable network, starting by moving fibre connections closer to all the connected homes through ‘node splitting’ and a DOCSIS 3.1 ‘high split’, which enables download speeds of over 3 Gbps. These upgrade plans, using the latest technology advances, such as DOCSIS 4.0, will lay a path to 10 Gbps speeds across VG’s hybrid fibre cable network in time.
FibreCo will offer wholesale access to all telecommunications service providers in Germany, exploiting the full potential of the fibre network. Vodafone Germany will act as the anchor tenant, entering into an agreement with the FibreCo upon closing of the Transaction. Within FibreCo’s footprint, Vodafone Germany has committed to market FibreCo’s network to new customers on an exclusive basis, while Vodafone Germany’s existing network will continue to service customers who do not wish to migrate to FTTH. Vodafone Germany is not providing FibreCo with any minimum revenue or volume commitment.
As part of the transaction, Vodafone is expected to receive cash proceeds from Altice of up to €1.2 billion. This figure comprises an upfront payment of €120 million at closing, additional deferred payments of up to €487 million (in aggregate) to be paid as the Roll-out progresses, once the first 1.5 million homes have been passed and until the end of the Roll-out, and an earn-out of up to €595 million in aggregate based on FibreCo’s performance.
Over the roll-out period, FibreCo intends to invest up to €7 billion, of which 70% is expected to be financed by debt that will be non-recourse to Vodafone and Altice. Vodafone’s share of equity contributions is expected to be lower than the cash proceeds realised over time.