In order to roll out fibre-to-the-home (FTTH) to up to 7 million homes over a six-year period, Vodafone Group Plc ("Vodafone") and Altice ("Altice") today announced the formation of a joint venture (JV) “FibreCo”. According to Vodafone, the FibreCo JV will create a "fibre-to-the-home" broadband network accessible to 7 million German homes, allowing the British company to enhance its current network in its largest market.
FibreCo and Its Investment Plans
The six-year project, which FibreCo will invest up to 7 billion euros on, is anticipated to be financed to a debt level of 70%. Vodafone Germany will be tasked with promoting faster broadband to new subscribers, with construction being entrusted to Altice subsidiary Geodesia. 50% of FibreCo will be owned by each company.
The tie-up, which is pending regulatory approval, is anticipated to be completed in the first half of 2023. The alliance, according to Vodafone Chief Executive Nick Read, enhances Vodafone's sizeable next-generation network with Altice's proven industrial competence and fibre-to-the-home construction capabilities. Vodafone estimated that it would receive up to 1.2 billion euros in cash from Altice, which over time would exceed its stock commitments to the joint venture. The pan-European mobile and internet provider Vodafone is under pressure from patient investors to increase returns, and Read is in discussions with CK Hutchison about merging their companies in Britain.
Patrick Drahi, a Franco-Israeli cable magnate, has gathered his businesses under the umbrella of Altice, an Amsterdam-based holding firm. It already runs collaborative partnerships for fibre infrastructure in Israel, Portugal, and France. Early on Monday, shares of Vodafone increased 0.5% to 100 pence.
In order to fully utilise the fibre network, FibreCo will provide wholesale access to all German telecom service providers. After the Transaction is closed, Vodafone Germany will operate as the anchor tenant and engage in a contract with FibreCo. While Vodafone Germany's current network will continue to serve customers who do not want to transition to FTTH, Vodafone Germany has agreed to exclusively promote FibreCo's network to new customers within FibreCo's footprint.
