Telefonica and Allianz form partnership to deploy fibre in Germany

30 Oct 2020

Telefonica Deutschland has announced it has reached an agreement with the private equity arm of German insurer Allianz for the creation of a joint venture (JV) to deploy fibre-optic networks in Germany. The companies will each hold a 50% stake in the open-access wholesale operator, which will roll out and market a fibre-to-the-home (FTTH) network primarily in rural areas. Over a period of six years, the JV aims to supply 2.2 million households in predominantly rural and previously underserved areas, and will invest up to EUR5 billion (USD5.8 billion) in the expansion of the network, which will have a length of over 50,000km. The wholesale provider will sell FTTH connection products to Telefonica Deutschland, which will be marketed as broadband services to O2 end customers. The wholesale contract has a minimum term of twelve years. As an independent FTTH open platform, it will also offer wholesale access to all telecoms service providers so they can in turn offer these services to their end customers.

Telefonica Group’s participation will be held through its infrastructure unit Telefonica Infra (40%) and Telefonica Deutschland (10%), while Allianz Capital Partners will invest 50% in the JV on behalf of Allianz insurance companies and the Allianz European Infrastructure Fund.

‘German consumers and companies want fast and stable internet connections. We see enormous potential for the fibre-optic market in Germany, as less than 10% of all households are currently connected to fibre-optics,’ commented Markus Haas, CEO of Telefonica Deutschland, adding: ‘With access to the new FTTH infrastructure, we can use our O2 high-performance fibre-optic connections to provide private and business customers in previously underserved regions. This fits perfectly into our strategy of offering our customers a strong fixed line network at an excellent price-performance ratio. Our participation in the new fibre-optic company is also an attractive long-term investment in a market with enormous future potential.’

The transaction is subject to the approval of the relevant merger control authorities and closing is expected to occur in the first half of 2021.