Spanish telco group Telefónica is reportedly lining up insurance company Allianz to invest in its fibre network ambitions in Germany.

The Spanish operator and Allianz’s private equity arm aim to create a joint venture that will plough €5 billion into the roll out of fibre-to-the-home (FTTH) infrastructure in under-served areas of the country, Reuters claims, citing a report in Spanish business newspaper Expansion.

The report comes less than a fortnight after the newswire’s own sources shared details of the €5 billion project, noting that the telco planned to ink a deal with banks and an infrastructure investor by the end of October. Two-thirds of the funding will come from the banks with the rest in equity, including from an unnamed investor already in talks with the company, they said.

It makes sense that that investor would be Allianz.

Allianz Capital Partners has a sizeable portfolio of infrastructure investments, including in transport and utility businesses. In recent years has diversified into telecoms infrastructure, teaming up with OMERS Infrastructure and AXA IM – Real Assets in 2018 to acquire a 49.99% stake in French infrastructure wholesaler SFR FTTH from Altice, and last year invested €300 million into Austrian FTTH network builder Niederösterreichische Glasfaserinfrastrukturgesellschaft, or nöGIG, in return for a 75% stake.

If the reports prove correct, this would be its first such deal in its home market.

Telefónica, meanwhile, is making a big push in the German fixed broadband market. The Spanish operator’s O2 unit has a strong position in the country’s mobile market, but remains a relatively small player in the fixed-line space; it’s DSL base of just north of 2 million connections as of mid-year was more than six times smaller than that of the incumbent.

Earlier this month it signed a landmark deal with Deutsche Telekom to piggy-back on its FTTH network, a move that will enable it to offer full fibre broadband and increasingly important converged services.

The Deutsche Telekom wholesale FTTH deal will be particularly important to Telefónica in large cities, while its new FTTH project will give it presence in harder-to-reach areas. Both deals build on an ongoing high-speed broadband effort from Telefónica, which inked a cooperation deal with cable operator Tele Columbus this time last year to gain access to its cable and fibre infrastructure, for example.

The German fibre market is entering a landgrab phase and Telefónica is clearly positioning itself to be a key player in that, alongside altnets like Kabel Deutschland; NetCologne and other regional players; Vodafone, which has bought fixed assets in recent years; and Deutsche Telekom, of course.

We’re expecting an update on Telefónica’s plans for fibre in Germany at its Q3 results presentation at the end of this month.