German fibre rollout gets another €5.75 billion

Deutsche Glasfaser has secured €5.75 billion in financing to help it roll out fibre infrastructure in Germany.

The move marks the latest injection of funds into the German fibre market, which has been attracting significant investment over the past couple of years. Deutsche Glasfaser, a private equity-owned altnet that is mainly targeting rural areas, claims it is the market’s largest financing sum to date.

The telco said it secured the financing from a consortium of creditors. It is made up of a €3 billion loan and a €2.5 billion investment facility – it describes this as a capex facility – as well as €250 million revolving credit line.

The fresh capital will make “a significant contribution” to the expansion of the fibre network to 4 million households in Germany by the end of 2025, Deutsche Glasfaser said in a statement. Those homes form part of the growth plan the firm outlined when it was acquired by private equity firm EQT and Canadian pension fund OMERS last year. At the time the company committed to a medium-term plan to spend €7 billion on rolling out full fibre connections to more than 6 million premises, although it is now talking about that as a long-term plan, and is working towards passing 4 million homes over the next four years.

To hit those kinds of targets takes money, and this latest financing commitment goes a long way towards giving the company the kind of cash it needs.

“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,” he said.

Executives always love talking up their companies’ achievements, naturally, but Deutsche Glasfaser is objectively doing well.

It has rolled out fibre to 1.2 million households in rural Germany and is currently deploying to 400,000 per year, a figure it aims to double to 800,000 by 2025.

Deutsche Glasfaser is one of a number of serious fibre builders in Germany looking to make up for lost time and bring the country into line with much of the rest of Europe. And the investment community is loving it.

This latest financing announcement comes just a month after IFM’s Global Infrastructure Fund agreed to plough €900 million into a fibre joint venture with incumbent Deutsche Telekom, for example, and less than three months after Liberty Global Ventures agreed a 50:50 JV with InfraVia Capital Partners to invest in fibre in Germany. And those are just a couple of examples.

Deutsche Glasfaser said its new financing, which was coordinated by the ING and Crédit Agricole CIB banks, replaces existing loans as well as bringing additional capital into the company. “It was significantly oversubscribed due to the high demand in the market,” it said.

No surprise there.