Liberty Global, Telefónica and InfraVia plough £4.5 billion into new UK fibre JV

The new joint venture will be 50% owned by Liberty Global and Telefónica and 50% owned by InfraVia Capital Partners, while VMO2 will be the anchor wholesale client and provide technical services.

The new as yet unnamed entity will roll out fibre-to-the-home to greenfield premises across the UK, with an initial target of 5 million homes not currently served by VMO2’s network by 2026, and an opportunity to expand to an additional 2 million premises. Liberty Global, Telefónica and InfraVia Capital Partners are putting £4.5 billion behind the project, partly through borrowing.

Liberty Global and Telefónica will jointly have a 50% stake in the JV through a holding company, with InfraVia owning the remaining 50%. VMO2 is acting as the acting as the anchor client, and has apparently pledged to enter into an agreement with the JV upon closing of the transaction. The company will target homes across the UK, both adjacent to the existing VMO2 footprint and new areas, we are told, and it will seek to attract additional third-party wholesale clients later down the line.

In terms of the wedge behind it, the three partners will fund up to £1.4 billion in aggregate, phased over 4-5 years, and have obtained £3.3 billion of debt financing from a consortium of financing banks.

“Telefónica has a recent track record of successfully developing broadband connectivity in many markets through strategic partnerships,” said José María Alvarez-Pallete, Chairman and CEO of Telefónica. “These deals help each country firmly increase their competitiveness and digital infrastructure to help their companies and economy thrive. The UK is, indeed, a growth market for us and we are very excited to be partnering with InfraVia to accelerate access to next generation broadband connectivity to a larger number of UK households and adding to Telefónica Infra’s growing portfolio.”

Vincent Levita, CEO and Founder of InfraVia added: “We are excited to be partnering with VMO2, Liberty Global and Telefónica to build and operate up to 7 million premises FTTH in the UK. The combination of our respective expertise in fibre network deployment, financing and operations in the UK, together with VMO2’s industrial scale and network construction know-how will be key to creating the undisputed second national fibre network in the UK providing access to broadband connectivity to millions of UK households. InfraVia has been a leading investor in digital infrastructure for the past decade. Attracted by the long-term trends of ever-increasing data usage and increased need for home connectivity, this would represent our 5th investment in fibre network deployment in Europe through strategic partnerships. We look forward to working with VMO2, Liberty Global and Telefonica in this partnership in the years ahead.”

The transaction is subject to the usual regulatory approval, and is expected to close in Q4 2022. It seems there is a very high ceiling for the amount of investment money available for fibre rollouts, this new JV represents just one of many recent announcements that involve cash outlays measured in the multiple billions. Whether the ongoing cost of living crisis has any impact on projected consumer upgrades remains to be seen.

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