Magenta ploughs more cash into Austria with €1 billion fibre JV

Magenta Telekom has buddied up with investment firm Meridiam in a joint venture that will spend €1 billion on the rollout of fibre in Austria by the end of the decade.

The operator, a unit of Deutsche Telekom, is pushing pretty hard on network expansion in Austria and wasted no time in reminding us that this latest investment plan comes on top of the €1 billion broadband and 5G pledge it made at its full-year results presentation back in February; it plans to spend that sum between 2022 and 2025.

The partnership with Meridiam will see another €1 billion spent between now and 2030 on the rollout of fibre-to-the-home (FTTH) to 650,000 households and businesses in rural areas and cities.

What Magenta is not telling us is how much of that spend it will contribute and how much will come from Meridiam, a France-based infrastructure investor which already has a presence in Austria, albeit outside of the telecoms space. However, Magenta Telekom points out that the firm has pledged as much as €1.7 billion into high-speed Internet projects elsewhere in the world, including Germany, Romania and North America, with a particular focus on connecting underserved communities.

As it stands, Magenta Telekom and Meridiam will finance the project between them, in whatever proportions they have agreed, but they are still evaluating the possibility of bringing in public funding too.

Key to the project is that, unlike many of its ilk, it includes no requirement for minimum uptake guarantees in order for network rollout to take place in a particular area.

“We are expanding directly and immediately without a minimum number of customers who have to sign a preliminary contract, so we are bringing high-performance internet to the regions faster,” said Andreas Bierwirth, outgoing CEO of Magenta Telekom. “And we offer coordination with the expansion of our mobile network. So that every community can boast the best, perfectly integrated infrastructure of fibre optics and mobile communications.”

As an aside, Magenta Telekom announced earlier this month that Bierwirth had chosen to leave the company. He will be replaced by Rodrigo Diehl, who is currently responsible for Deutsche Telekom’s European B2C business, but will relocate from Bonn to Vienna to take up his new role in October.

Thus it will likely be Diehl who presides over the network rollout, given that construction cannot begin until the JV has been given the go-ahead by the European Commission. The companies have already started the approvals process though and expect to get the green light by the end of the year.

Given Brussels’ commitment to improving access to Gigabit connectivity, the companies are doubtless pretty confident their plan will pass muster. And Meridiam is making the kind of noises the European regulators love to hear.

“We look forward to working with Magenta and the local communities to develop this essential infrastructure, provide access to high-quality internet, and make a long-lasting positive impact on society,” said Stephan Wehrmann, Business Development Director DACH Meridiam.

Naturally, Magenta Telekom is not the only company pushing fibre development in Austria. Earlier this week incumbent A1 Telekom Austria announced a fibre wholesale deal with rival Drei and said it would open up its fibre infrastructure to others. In the announcement, A1 chief executive Marcus Grausam noted that the telco has committed to investing over €500 million in the expansion of its digital infrastructure this year alone.

But the incumbent has an increasingly formidable competitor in Magenta Telekom. Let’s not forget that Deutsche Telekom spent the best part of €2 billion to acquire cable operator UPC’s Austrian outfit five years ago, which it later merged with its mobile operations there to create Magenta Telekom, picking up a comprehensive HFC network in the process. It appears it is now taking the opportunity to throw some more cash over the border and build on that foundation.

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