Financiers see German FTTH bringing them many happy returns
German telco Deutsche Glasfaser has received €5.75 billion in the largest fibre to the home (FFTH) financing deal in German history – so far.
The telco said it secured the financing, from a consortium of creditors, which comprises a €3 billion loan and a €2.5 billion ‘capex facility’ for its fibre installations. The rest of the total figure is made up of a revolving credit line of €250 million.
In a press statement it said the funds fresh are “a significant contribution” to its planned fibre network expansion target of 4 million households in Germany by the end of 2025. Deutsche Glasfaser is running fibre to households in rural Germany at a current rate 400,000 per year and it claims it’ll double that rate by the end of 2025. So far it has installed fibre to 1.2 million houses.
Long term plan is fibre to 6 million homes
The connected homes are part of the growth plan the firm gave when acquired by private equity firm EQT and Canadian pension fund OMERS last year. The initial plan to spend €7 billion rolling out full fibre connections to more than 6 million premises is now a long-term ambition.
“We have shown in the past few years that we can implement our ambitious plan for area-wide fibre optics in rural areas,” said Jens Müller, CFO of Deutsche Glasfaser. “The capital market is now rewarding that. This financing ensures that we can continue to pursue this plan in the years to come and allows us to increase the pace of expansion. At the same time, the transaction will improve our financial flexibility,” said Müller.
Germany has lagged behind Europe on fibre roll outs and the pent-up demand has created the chance for healthy returns for European financial markets. Deutsche Glasfaser is one of a number of fibre builders in contention.
The glass not even half fulfilled
The start of market liberalisation was reported in October when the telecom regulator, Bundesnetzagentur (BNetzA), proposed “light” regulation to speed the expansion of the country’s fibre infrastructure. At the time Germany was close to the bottom of the European league table for fibre penetration at under per cent, according to the FTTH Council Europe. This week Primevest Capital Partners announced it was funding a €6 fibre rollout in the German town of Hullhorst.
Last month IFM’s Global Infrastructure Fund pledged €900 million for a fibre joint venture with incumbent Deutsche Telekom. Liberty Global Ventures in in an equal partnership with InfraVia Capital Partners to invest in fibre in Germany.
In a DG statement it said there is so much interest in financing telecoms in Germany that the prospect of investing in DG was “significantly oversubscribed”.