Telefonica, Entel, and KKR Ink Deal to Expand Fibre Optic Infrastructure in Peru

US-based investment firm KKR partners with Telefonica and Entel to establish Peru's nationwide open-access fibre optic network. The collaboration aims to enhance connectivity, bridge the digital divide, and promote competition in the market.

Highlights

  • KKR acquires majority stake in PangeaCo and fibre optic networks of Telefonica del Peru and Entel Peru.
  • The collaboration aims to provide greater access to high-speed internet services and bridge the digital divide in Peru.
  • KKR plans to invest approximately USD 200 million to expand the fibre network and reach 5.2 million homes across 86 provinces by 2026.

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KKR, Telefonica, and Entel Ink Deal to Expand Fibre Optic Infrastructure in Peru

US-based investment firm KKR, Telefonica Hispanoamerica, and Entel have announced an agreement to create Peru's first nationwide open-access wholesale fibre optics company. Under the agreement, KKR will acquire a majority stake in PangeaCo and the existing fibre optic networks of Telefonica del Peru and Entel Peru. According to KKR, the main objective of this partnership is to enhance fibre optic connectivity across Peru and provide greater access to high-speed internet services.




Also Read: Entel to Focus On 4G, 5G and Fibre as Part of 2023 Investment Plan

KKR's Majority Stake in Resulting Company

According to the official statement, the transaction will involve consolidating the fibre optic networks of PangeaCo, Telefonica del Peru, and Entel Peru into an independent company controlled by KKR. This new network will operate on an open-access basis, allowing all internet service providers to utilize the infrastructure.

Investment Plans and Expansion Goals

KKR plans to invest approximately USD 200 million to expand the existing fibre network, aiming to more than double the number of homes passed by the network from over 2 million to 5.2 million across 86 provinces by the end of 2026.

OnNet Fibra de Peru: An Independent Company

Under the agreement, KKR will obtain a controlling stake in PangeaCo, which will then acquire the fibre optic networks of Telefonica del Peru and Entel Peru. The resulting fibre brand, OnNet Fibra de Peru, will construct and manage Peru's most extensive fibre optic network while maintaining exceptional quality standards.

OnNet Fibra de Peru will have KKR as the majority shareholder with a 54 percent stake, while Telefonica Hispanoamarica and Entel Peru will hold 36 percent and 10 percent, respectively. The new fibre optic network will be accessible to all internet service providers, encouraging greater competition in the wholesale market.

Also Read: Polish Open Fiber Expands Network to Over 7,000 Households, Secures Funding

Telefonica and Entel to Serve as Anchor Tenants

Telefonica del Peru and Entel Peru will serve as anchor tenants on the network, allowing them to offer ultra-high-speed services to a larger customer base. The deal will not impact current customers of PangeaCo, Telefonica del Peru, and Entel Peru, but they will benefit from the larger network's capabilities.

Fibre Penetration in Peru

According to an OSIPTEL survey (2021, 2022), only around 35 percent of households in Peru have access to high-speed fibre optic networks, despite approximately 88 percent having mobile or fixed internet service. KKR says it plans to extend the reach of the fibre optic network to include municipal areas outside of Lima, as well as middle and low-income households, thereby bridging the connectivity gap in the country.

Also Read: Peru Implements Additional Security for Mobile Services

KKR Wants to Replicate Chile and Colombia Models

According to a statement from KKR, their efforts to improve connectivity and competition in Chile and Colombia have paved the way for this new venture. Since KKR acquired OnNet Fibra de Chile in February 2021, access has been expanded from 2.4 million to 3.7 million homes passed.

Similarly, OnNet Fibra de Colombia has increased homes passed from 1.2 million to 2.4 million since signing in July 2021. Both companies have also attracted multiple internet service providers to use their open-access networks.

Investment and Operational Assistance to OnNet Fibra de Peru

KKR said it is investing in OnNet Fibra de Peru through its KKR Global Infrastructure Investors 3 fund. To support this investment, KKR will provide operational assistance through NEXO LatAm, a digital infrastructure business that aids KKR's Infrastructure strategy in Latin America. KKR and NEXO LatAm have extensive experience in supporting the successful expansion of open-access fibre optic investments.

Also Read: Telefonica Movistar Surpasses One Million FTTH Subscriptions in Colombia

The transaction is subject to regulatory approvals, including clearance from the Peruvian antitrust agency, INDECOPI. Upon completion, this collaboration is expected to accelerate Peru's digital connectivity and contribute to the country's sustainable development.

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Telecom Analyst

Passionately following the Indian #Telecom Industry for over a decade from Business, Consumer and a Technical perspective. My primary focus area is Consumer & Digital Experience.

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