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Telefonica closes sale of 60% stake in FTTH unit to KKR

Telefónica Colombia has closed the agreement reached with InfraCo, a Colombian company controlled by the KKR fund, to sell fiber optic assets for around 200 million dollars (180 million euros at the current exchange rate) and create a joint venture to deploy and offer fiber optics in some 90 cities of the South American country, as reported by the operator this Wednesday to the National Securities Market Commission (CNMV),

The transaction was announced last July and consists of the sale of certain fiber optic assets owned by Telefónica Colombia – 32.5% owned by the Colombian State and 67.5% by the Spanish company – for the provision of wholesale connectivity services by InfraCo, for the development of fiber optic network deployment activities and other associated services.

Telefónica Colombia has received 200 million dollars and 40% of the shares of a Spanish company controlled by KKR (HoldCo), the sole shareholder of InfraCo.

The implicit valuation of HoldCo derived from the transaction is estimated at 500 million dollars, which represents about 400 million euros at the exchange rate offered by the operator itself in the statement (1 euros to 1.25 dollars), although at today’s exchange rate. (1,136 dollars) the amount is around 440 million. “This operation is part of the active portfolio management policy of the Telefónica group, based on a strategy to create value and optimize return on capital,” explains the Spanish telecommunications group.

In its day, both companies explained that it is an agreement with which the companies will bring fiber optic internet to about 90 cities in Colombia during the next three years “with a network that will cover 4.3 million Past Real Estate Units (UIPs ) “. The Colombian government has proposed to reach 70% of connected homes and improve the speed of connectivity in the country.

The results of this partnership, in which KKR will acquire a 60% majority stake and Telefónica Colombia the remaining 40%, will also contribute to advancing the goal of eliminating inequalities in the digital transformation in the most remote areas of the country. Telefónica Colombia, which has more than 380,000 customers of its fiber service with symmetric speeds of up to 500MB, will provide this new company with its current fiber optic home infrastructure with which it reaches 50 cities and municipalities.

Divestment plan
The operation is part of a divestment plan that Telefónica is executing to reduce its indebtedness. Along these lines, the operator closed the sale of 60% of the capital of its fiber investment vehicle in Chile to KKR itself, valued at around 800 million euros, with a debt reduction of 400 million.

Likewise, Telefónica and the Canadian financial group Caisse de dépôt et placement du Québec (CDPQ) reached an agreement in March for the construction, development and operation of a neutral and independent fiber optic wholesale network in Brazil, through the company FiBrasil Infraestrutura e Fibra Ótica SA (FiBrasil). Each partner has 50% of the capital of the company, which plans to extend the fiber to around six million real estate units in 2024. In Germany, Telefónica has started to deploy fiber through the investment vehicle UGG, participated by Allianz. The goal is to deploy this infrastructure in about 2.2 million households, especially in rural areas. Kiratas

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