Vodafone Spain and MasOrange finally sign dotted line on Spanish joint fibre venture

FibreCo, as the new entity is presently called, will pool the network assets of Vodafone Spain and MasOrange to create a 100% fibre-to-the-home (FTTH) network covering 12.2 million premises across Spain. “This will be the largest and most highly developed FibreCo in Europe, benefiting from having virtually all its FTTH network already built”, boasts the release from UK-based investment firm Zegona Communications, which bought Vodafone Spain in 2023 for €5 billion.

Vodafone Spain will use FibreCo to provide services to its existing and future retail and wholesale customers within FibreCo’s footprint, and it will look at the ‘rapid adoption’ of new technologies such as XGSPON, we’re told.

In November last year Zegona also announced a deal with Telefónica de España to create another new fibre network company covering 3.6 million premises across Spain and to renew its fibre wholesale access contracts – and its release today states that this alongside the new FibreCo with MasOrange “completes the transformation of Vodafone Spain’s fixed line strategy.”

“Entering this FibreCo partnership with MasOrange, alongside our recently announced agreements with Telefonica, transforms Vodafone Spain’s fixed line strategy,” said Eamonn O’Hare, Chairman and CEO of Zegona. “The combination will give guaranteed access to a future-proof all fibre national network with attractive economic terms and will enable substantial cost savings across the business. Monetising these two FibreCos is expected to deliver very significant Zegona proceeds, generating the ability to reduce leverage and provide a return of capital to shareholders.”

Leaked reports in July last year suggested that Vodafone Spain and MasOrange were working on the creation of a fibre networks company that could have a valuation of as much as €10 billion. The fact they were working towards a JV was swiftly confirmed the following day in official press releases.  

Later in September reports suggested a €2 billion enterprise valuation, with sources telling El Economista that the telcos have hired investment banks Barclays and BBVA to manage the sale of a 40% stake in the venture, which it said would bring in around €800 million.

While the exact numbers in the contract have not been disclosed yet, according to today’s release, the entity is expected to have a run-rate EBITDA of circa €480 million after 3 years, based on Zegona’s projections, and a process has been started to bring a third-party financial investor into the share capital of FibreCo which will lead to MasOrange retaining 50% ownership. Zegona is expected to hold 10% and the financial investor 40%.

There are no names yet, but we’re told initial interest from investors is strong. There are still some regulatory approvals to tick off as well, but completion of the deal together with the introduction of the third-party investor is expected by the end of the first half of 2025.