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Igneo buys into German fibre builder

E.ON has sold a 50% stake in its German fibre operation to Igneo, a deal that demonstrates the enduring appeal of infrastructure assets to the investor community.

The energy company this week announced it has brokered a deal with asset manager Igneo for half of Westenergie Breitband, Neither party shared financial information.

In fact, the companies involved didn’t give away much at all about the deal, but it’s pretty clear that we’re looking at another case of an operator wanting to cash in on its infrastructure and bring in some money for future expansion.

“Strong partnerships are particularly important for the digitization of our country. That’s why we are delighted to have joined forces with Igneo, a renowned and long-term investor, to accelerate the rollout of broadband in Germany,” said Thomas König, member of the E.ON management board, responsible for networks.

Details are patchy on the extent of that acceleration too. The new joint venture – to use E.ON and Igneo’s words; essentially Westenergie Breitband remains the same company but with a new 50% shareholder – plans to provide high-speed broadband connections to over 1.5 million households and wholesale customers in Germany, the firms said. They did not disclose any previous targets by way of comparison.

However, according to Westenergie Breitband’s website, the company has laid 10,000 km of optical fibre in the states of North Rhine-Westphalia, Rhineland-Palatinate and Lower Saxony, giving 1 million-plus people in 300 municipalities access to its network. The operator’s raison d’être is to provide fibre connectivity to rural communities, offering services to municipalities and via wholesale deals, as well as direct to end-users under the E.ON Highspeed brand.

By way of further background, energy provider E.ON announced its arrival into the broadband market at the start of 2019 with the launch of a €130 million rollout project in Brandenburg, and has built up this side of its business in the intervening years.

Meanwhile, at the back end of last year the company announced the creation of a new unit, E.ON TowerCo, with the remit of converting electricity pylons so they can be used as radio masts for 4G and 5G networks. It’s still early days for that business, but at the time the company noted that it has 100,000 towers across Germany that could potentially be used to house radio antennas. With the company having the huge advantage of already owning the towers and therefore being able to sidestep the myriad planning issues that often come will cell site construction, there’s clearly the potential for a significant line of business here.

In May E.ON TowerCo added a further string to its bow by partnering up with Netherlands-based radio mast operator NOVEC to build several hundred new sites in Germany, again using E.ON’s existing footprint – rooftops and properties it already owns, essentially.

While E.ON’s message in the towers business is around eliminating coverage black spots and reaching remote areas, it’s fair to point out that it is also dipping its toe in the seriously lucrative passive mobile infrastructure market. And while that’s something of a digression to the main fibre broadband story, the end result could well be similar: the arrival of a deep-pocketed investor.

But back to fibre.

“We are excited to establish this long term partnership with E.ON, one of Europe’s largest operators of energy networks and infrastructure,” said Gregor Kurth, Partner at Igneo Infrastructure Partners.

“Westenergie Breitband is already a leading high speed broadband provider in its region. The scale, capability and ambition that both Igneo and E.ON bring to this partnership will allow the company to expedite its rollout and provide many more households with access to full fibre broadband,” he added.

And initiatives like this will also help the German government with the target it announced last week of reaching full fibre coverage by 2030. Germany was once a fibre laggard, but the wheels are well in motion to change that image.

 

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