Telefonica and Vodafone Spain set to crack on with €2 billion fibre JV this year

The latest on the JV, including a suggested €2 billion enterprise valuation, comes from El Economista, whose sources claim that the telcos have hired investment banks Barclays and BBVA to manage the sale of a 40% stake in the venture.

Parting with those shares will bring in around €800 million, the Spanish financial paper said, which is a tidy sum of cash for the telcos in question.

We learned of the fibre joint venture plan in July, but the details were thin on the ground. The telcos confirmed that through what they are calling FibreCo they plan to roll out a joint fibre network covering 3.5 million premises. They also disclosed that they would bring in a third-party financial investor, but that Telefonica would likely retain majority ownership, while Zegona – Vodafone Spain's parent company since it bought the operator in May – would keep a 10% stake.

They did not share a timeframe for the plan. But now it seems they are pushing hard to get the deal over the line, and that it could happen more quickly than we might have predicted.

Indeed, El Economista describes the telcos as "accelerating their plans," to bring in an investor. They aim to kick off the process in the next few weeks and have it up and running in the fourth quarter, the paper said, without citing sources.

These are always complex transactions that take time, but Telefonica has a certain advantage in that it has been here before.

In July last year it inked a deal to combine its fibre infrastructure in Peru with that of Entel, before selling a stake to investor KKR. That deal was slightly different than the one in progress in Spain in that Telefonica agreed to pass a controlling 54% stake to KKR, keeping 36% for itself and 10% for Entel. Similarly, it brokered fibre co-investment deals, as it calls them, with KKR in Chile and Colombia too; the investor took a 60% stake in both businesses.

And in 2022 Telefonica sold off €1 billion worth of its domestic fibre assets in rural areas to Crédit Agricole Assurances (CAA) and Vauban Infrastructure Partners, giving them a 45% stake in the resulting new business. Meanwhile, in the UK it and partner Liberty Global share control of the Nexfibre network builder with InfraVia Capital Partners.

All of which is a slightly long-winded way of saying that Telefonica is no stranger to monetising its fibre operations.

Presuming the Spain deal with Vodafone goes ahead – and there are potential regulatory hurdles, as well as the financial T&Cs to hammer out – it will be part of a broader move towards fibre business partnerships in the market.

Vodafone has also done a deal with recently-merged MasOrange to create a joint fibre network company that will cover 11.5 million premises. The pair also plan to bring in a third-party investor to hold a 40% stake, while MasOrange will claim 50% of the new company and Vodafone 10%.

Doubtless all of the usual investors have their eye on both of these potential deals. And if this latest press report is anything to go by, we could have some names sooner rather than later.