Wind Hellas spins off €70 million fibre business

Wind Hellas has unveiled plans to spin off its fibre broadband assets into a new company that will operate as an open access fibre wholesaler.

The Greek mobile operator is transferring its fibre business to an entity to be known as Hellenic Openfiber, including physical infrastructure like ducts and sites, the fibre cables themselves, and active equipment, although Wind will retain the portion of active equipment that serves its mobile business. In all, Hellenic Openfiber will take over 3,379 km of fibre network, including 595 km yet to be built and 170 km owned by the public power corporation and leased exclusively to Wind.

Deloitte, which produced a valuation report for Wind Hellas in the summer, puts the value of the new fibre entity at an estimated €69.9 million, including assets worth just over €54 million. Its revenues for this year will be around €19.2 million and earnings €7.8 million.

Wind will naturally remain as customer of Hellenic Openfiber, whose goal will presumably be to attract other retail ISPs, potentially including incumbent operator Cosmote, Vodafone, and newcomer Inalan.

Fibre network transactions are fast becoming the norm in the telecoms space, as operators seek to monetise assets and/or broker deals with investment partners to help share the financial load as well as the returns.

At this stage, there is no talk of Wind selling the new business – in part or in its entirety – but it’s hard to believe that such a move will not be on the cards at some point. The Greek fibre market needs some serious investment.

According Deloitte, the financial crisis in Greece, coupled with the country’s difficult terrain, means fibre infrastructure is severely lacking; the firm puts active superfast broadband connections at just 27,000, citing European Commission statistics from last year.

To add further context, the FTTH Council Europe’s data shows Greece as a European laggard. Its September 2020 data ranks the country almost bottom of its 39 markets with coverage at just 9.9% of homes, while take-up remained below 1% of households. At that time, it had almost 4 million homes left to cover, or to put it another way, most of them.

Wind claims to have 110,000 active wholesale customers for next-generation access, which will be transferred to the new entity.

It’s worth noting that Wind Hellas is in the process of being acquired by United Group, which plans to merge the telco with its Greek pay TV provider Nova to create a unified player. When that deal closes next year, Wind will be well-positioned to compete more effectively in the retail market. Spinning off the fibre business into a separate wholesale player will presumably serve to focus the attentions of the merged company on that retail space.

Interestingly, the Deloitte report focuses heavily on the benefits of the wholesale model for fibre, looking particularly at predictable and stable cash flows, operational efficiency, and the fact that wholesalers are an attractive prospect for long-term investors.

“Wholesale-only models bring greater return on investment opportunities and thus seem to be the new trend in the market,” the firm noted.

It seems pretty clear which way the wind (ahem) is blowing.