FibreCo plans to spend up to €7bn passing up to 7 million homes over a six years
Having announced the deal in October 2022, Vodafone Group has now completed the sale of 50% of its German FTTH infrastructure to Altice. The creation of the joint venture received European Commission approval in February.
The FibreCo intends to deploy FTTH to up to 7 million homes in Germany over a six-year period, investing up to €7 billion. This will be partly financed by debt that will be non-recourse to Vodafone and Altice. In other words, if the borrower defaults, the issuer can seize the collateral but no any further recompense, even if the collateral does not cover the full value of the defaulted amount
Total debt facilities of up to €4.6 billion have been arranged with a group “of leading financial institutions to support the network deployment,” Vodafone’s press statement says without providing further detail.
As outlined in the original announcement, “Vodafone is expected to receive cash proceeds from Altice in excess of Vodafone’s share of equity contributions over time”.
Vodafone also stresses that this partnership with Altice is complementary to Vodafone’s upgrade plans for its hybrid fibre cable network – that is the cable network it bought from Liberty Global.
Germany is Vodafone’s biggest European market but has performed poorly. In Q3 of fiscal year 2022, Germany’s adjusted EBIDTA fell 7.4% to €2.68 billion, apparently due in part to losing broadband customers and higher customer acquisition costs.
The news was worse still in Q4 when Vodafone reported a 1.8% fall in services revenue compared with Q3 to €3.35 billion. The interim CEO, Margherita Della Valle, said at the Q4 earnings announcement, “…we can do better”. How big a difference the deal with Altice makes remains to be seen.
In February, Vodafone Germany also announced deepened ties with Tech Mahindra in a drive to improve customer experience.